Budget 2020 been dubbed in places as the ‘small business budget’. It’s fair that there are policies very specifically aimed at smaller businesses but what are they and will it do enough to help the 700,000 small businesses in the UK?
We know the budget isn’t always a great cause for excitement and this one feels a little underwhelming (is it always?!) but there are a few items that should help business owners. We’ve broken them down into some key, relevant, areas.
For employers there are a few key policies to note:
There is no increase in the income tax threshold as is often seen. There is, however, an increase in the NI threshold that will save most who are paid above this amount around £100. It will also save employers a much less generous (!) £21.50 per employee.
Further to this there is an Increase in employment allowance (EA), for eligible employers, to £4,000. This is from the start of the new tax year in April. BUT it’s not all as good as it sounds. It will now be classed as de minimis state aid and therefore could affect other things such as R&D claims….each business will need to check and plan to see whether or not EA is right for them.
In response to COVID 19, Statutory Sick Pay (SSP) is now available from Day 1 of illness (usually day 4). Another key change is that SSP up to 14 days can be reclaimed from HMRC by businesses employing less than 250 people. Previously this was funded in full by the employer.
It should also be noted this is available for employees who are required to self-isolate but don’t show symptoms.
For VAT registered businesses:
There’s not much to say here but from 1 December 2020, VAT on digital books and newspapers and magazines will be removed. The questions for companies this affects is whether to reduce prices or see a 20% increase in margin.
Business rate payers:
Shops, cinemas, restaurants and hotels whose property has a rateable value of less than £51,000 will pay no business rates this year.
Businesses eligible for small business rates relief will be eligible for a £3,000 grant.
Entrepreneurs relief
It was rumoured that this relief, for eligible individuals who sell shares in their business, would be removed altogether. It is therefore good news that it has been retained but greatly restricted. The lifetime allowance will reduce from £10 million to £1 million.
Electric cars
If you hadn’t already seen, electric company cars could now be very tax efficient. Of course there are concerns over the electric network so it’s encouraging to see HMRC have pledged £500 million to improve the fast charging network around the UK.
So, Budget 2020 contains nothing earth shattering but enough to provide a welcome boost for small businesses, in particular employers.
If there is anything in the above you’d like to discuss further or want to understand how it may affect your business more specifically, please do get in touch.
