Newly appointed Chancellor of the Exchequer Rishi Sunak delivered his first ever Budget to the House of Commons. Unusually, his Budget featured small businesses very prominently in his list of proposed measures. Phil Harris of Harris & Co chartered accountants explains exactly what the Budget means for small businesses.
THE Chancellor began his Budget speech by focusing on coronavirus. He introduced various measures to help businesses survive the outbreak. Here are the key points for small businesses.
For small businesses with employees, including those who work through their own limited companies, where a director or employee has to self-isolate or falls sick with coronavirus, the affected individual can be paid Statutory Sick Pay for up to two weeks and the business can reclaim the cost in full from the government. This relief applies as long as the business had fewer than 250 employees on 28 February 2020. As Statutory Sick Pay cannot often be reclaimed, this could bring a welcome cash boost.
This new relief cannot be claimed by sole traders and partners for themselves (unlike the directors of their own limited company). The rules around claiming certain other state benefits for the self-employed have been relaxed for the duration of the coronavirus outbreak. However as not all self-employed individuals claim benefits, this will not help everyone.
Small and medium-sized businesses affected by coronavirus have the option to apply for a loan under the temporary Coronavirus Business Interruption Loan Scheme. Under this new scheme, banks and other lenders will be able to make loans to affected businesses of up to £1.2m per loan, with up to 80 per cent of each loan backed by a free government guarantee.
Small businesses in the retail, hospitality and leisure industries will pay no business rates for 2020/21. Many businesses who are eligible for the small business rate relief will also be eligible for a £3,000 cash grant to help meet their costs.
HMRC’s Time to Pay service will be scaled up to give businesses affected by coronavirus more time to pay their taxes. HMRC will also waive late payment fines and interest where a business is unable to contact HMRC or pay their tax due to coronavirus. Both options are very welcome news.
The Employment Allowance will be increased from £3,000 to £4,000 from April 2020. The Primary Threshold and Lower Profits Limit will also both be increased to £9,500. However the Secondary Threshold remains unchanged.
After so much positive news for small businesses, there had to be some negative news. On the downside, the planned changes to how IR35 operates will go ahead from 6 April 2020. The planned changes move the compliance requirements from the contractor to the end client for large and medium-sized private sector businesses who engage freelancers.
Contact Harris & Co on 01604 660661 or visit the website www.harrisandco.biz