Budget day began with an emergency announcement from the Bank of England. To reduce Interest rates from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in history. The Bank said it would also free up billions of pounds of extra lending power to help banks support firms.
By the afternoon the new Chancellor Wednesday 11 March 2020 Budget Day Rishi Sunak held the the famous red brief case and delivered his first Budget.
The Main Highlight
It was no surprise that the Chancellor began by addressing the economic impact of covid-19
The Chancellor said that the Government is launching a response to the potential economic impact of covid-19, worth as much as £12 billion and comprising three parts:
- First, he said that the Government will provide the NHS with whatever funding it needs to be able to deal with the consequences of covid-19.
- Second, he said that the Government will act to support the finances of people who cannot work as a consequence of covid-19, including those who are self-isolating. As had previously been indicated by ministers, Statutory Sick Pay (SSP) will be paid from day one, while the self-employed and people working in the ‘gig economy’ will gain quicker access to benefits, such as Universal Credit.
- Third, the Chancellor announced a package of measures to protect businesses from the economic impact of covid-19. Businesses with fewer than 250 employees will have the cost of paying SSP to employees who are absent owing to covid-19 for up to two weeks reimbursed by the Government.
Meanwhile, there will be deferred tax arrangements available for businesses and self-employed individuals, a temporary Coronavirus Business Interruption Loan Scheme, worth up to £1.2 million per business, and business rates will be suspended for a year from April for those with a rateable value below £51,000 in the retail, leisure and hospitality sectors.
The Government will also provide a cash grant of £3,000 to each business eligible for the small business rates relief, worth £2 billion in total to the UK’s 700,000 smallest businesses.
Key announcements for your business
- Reduction in UK interest rates from 0.75% to a historic low of 0.25%
- More than £600 billion for infrastructure projects pledged
- £5 billion emergency response fund in place for NHS to tackle coronavirus
- SSP will be paid to all those who choose to self-isolate
- The cost of providing SSP for up to 14 days will be refunded in full by the Government for businesses with fewer than 250 employees
- Economy predicted to grow 1.1% this year
- National Insurance Contributions tax threshold to increase from £8,632 to £9,500
- “Reading tax” on e-publications abolished from December 2020
- “Tampon tax” on women’s sanitary products abolished from January 2021
- Business rates abolished for some firms with a rateable value below £51,000 this year
- Employment Allowance to increase from £3,000 to £4,000
- £2.2 billion funding pledged to support small businesses Corporation Tax to remain at 19%
- Duties on fuel, ciders, wines, spirits and beers frozen for year ahead
- Affordable Homes Programme extended
- Plastic Packaging Tax introduced from April 2022 to combat plastic pollution
- £500 million to support the rollout of new rapid charging hubs
Tax and National Insurance
- Changes to Entrepreneurs Relief – the rate of 10% tax will now only apply to the first £1m of gains made when selling a business, rather than £10m previously. This is effective immediately.
- The corporation tax drop which was planned to be 17% from April 2020. This reduction was shelved during the election and was confirmed today. Corporation Tax will stay at 19%.
- R&D rebates will increase from 12% to 13% for ‘large’ businesses.
- Employment allowance to change from £3,000 to £4,000.
- The National Insurance threshold before Employees pay NI will rise from £8,632 to £9,500 from April 2020.
- Plastic packaging tax from April 2022.
- Pension allowance changes for higher earners, but still a max of £40k can be contributed per year
Our experts will be advising and updating the all these implications from the Chancellors’ budget to help you and your business benefit in the long-term. We have outlined some of the business features from the budget.
- Launching a fundamental review of business rates that will report in the autumn
- A new pubs discount will be introduced to take £5,000 off the business rates bills of eligible pubs with a rateable value below £100,000.
- The Employment Allowance for Employer National Insurance Contributions is increasing from £3,000 to £4,000. Over half a million businesses will benefit from this reduction to their costs of employment, with an average gain of £850 per year.
- The Structures and Buildings Allowance for Corporation Tax will be increased from 2% to 3%, giving relief on an extra £100,000 next year if you’re buying a building worth £10 million.
- £28m package and up to 10,000 Start-Up Loans to support entrepreneurs and businesses to start
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