How will Budget 2020 affect your small business?
While governments and the media around the world concentrate on coronavirus, today the UK Government set out their response as they announced plans for tax and spending in this year’s Budget.
Overall the outlook for small businesses looks positive in today’s Budget, the first delivered by the Conservative Chancellor, Rishi Sunak.
Today’s Budget follows the surprise announcement this morning that The Bank of England has cut the base interest rate from 0.75% to 0.25%. Both this emergency response from the BoE and the first points delivered by Sunak in the Budget are to help manage the economic impact of coronavirus.
Here at Tide, we were delighted to hear about the measures to help small businesses cope if your business is interrupted and/or your employees are sick or isolated.
Besides helping small businesses cope with the impact of coronavirus, the Budget announcements will change how some businesses are taxed, affect the price of the materials we buy and increase innovation to help towards the UK’s environmental targets.
Here are a few ways that Budget 2020 will affect your small business:
- Worried about how you’ll afford sick pay for employees off with coronavirus?
If you employ fewer than 250 people, you’ll be eligible for a refund for Statutory Sick Pay. It’s limited to 2 weeks per person and you won’t need a note from their GP. We’re not clear yet on what dates this scheme will be in place or how you claim so make sure you keep detailed records.
- Buying or delivering goods?
Fuel duty is frozen, helping keep your costs down.
- Driving, transporting or delivering?
This year’s Budget sets out spending of billions of pounds to improve roads and rail by 2026. This includes £27bn for motorways and artery roads and £2.5bn on fixing potholes and resurfacing in England.
- Struggling with poor broadband?
The Budget promises £5bn for super-fast ‘gigabit-capable’ broadband in even the most remote places.
- Running a business in the retail, hospitality or leisure sectors?
If your company’s rateable value is less than £51,000, you won’t pay business rates this year. This ‘tax holiday’ could save your business up to £25,000.
- Running a pub?
Duty on beer, cider and wine is frozen so you won’t have to pass on costs to your customers. And pubs will get a business rate discount of £5,000, up from £1,000.
- Subscribing to newspapers or journals?
From December 2020, there will be no longer be VAT on digital publications including newspapers, e-books and academic journals.
- Using ‘virgin’ packaging rather than recycled?
Our smart Tide members are already using recycled or recyclable packaging, but there’s now even more incentive to look for better eco-friendly options: from April 2022, the Government will introduce a charge of £200 per tonne for packaging with less than 30% recycled content.
- Interested in getting a grant?
If you’re eligible for Small Business Rate Relief (SBRR), you’ll be eligible to apply for a grant of up to £3,000 to help meet your business costs. We’re not clear yet on how to you go about applying for these grants.
- Not able to pay HMRC?
If you’re in ‘financial distress’ with an outstanding tax bill, the Time to Pay scheme could allow you to delay paying what you owe. HMRC will waive late payment fees if your company can’t contact them or pay your taxes due to the coronavirus.
- Thinking of winding up or selling your business?
Entrepreneurs’ Relief is being reformed, rather than abolished, as predicted. The lifetime amount of relief will decrease from £10m to £1m.
Get advice before you make decisions about tax
While we’re experts in looking after business bank accounts, we rely on the experience and insight of financial experts when we make our business decisions. So when you’re making any decisions to do with tax, we recommend you speak to your accountant or tax advisor.
Below we’ve rounded up some of the best coverage and analysis of the UK Budget 2020 from trusted media organisations and commentators:
Read more from UK financial journalists
At the Guardian, their live commentary puts each set of announcements in context. Money Editor Patrick Collinson believes it’s a budget for drivers, drinkers and builders, overshadowed by coronavirus. And Economics Editor Larry Elliot explains why he believes the Bank of England rate cut just before the Budget was perfectly timed.
Experts at consumer champions Which? Money have free content to help you understand this year’s Budget, with emphasis on how it affects individuals:
Which? Money’s Budget 2020 coverage
Similarly at MoneySavingExpert, the focus is on how individual consumers are affected by the Budget:
MSE: Budget 2020 round-up
Read more from the UK Government
HM Treasury‘s full policy paper on Budget 2020 covers every aspect in detail. For small business owners, the section you might want to head to first is 1.32 Support for businesses
Our CEO’s response
Tide’s CEO Oliver Prill said:
“As a business dedicated to supporting micro, small and medium-sized businesses, we’re very pleased to see the UK Government announce measures to ease the effect of the coronavirus outbreak on UK SMEs.
“Our recent research reveals that UK SMEs are lacking confidence in the UK economy and their ability to grow their businesses in the short term. Business owners highlighted coronavirus as a major concern, citing in particular the impact on imports from Asia, travel, and global political and market stability.
“While we were pleased to see the Government’s response to the coronavirus, we were disappointed to see a reduction in Entrepreneurs’ Relief, but we understand the need for reform and will keep an interested eye on how it impacts UK SMEs.”
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