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Raft of measures for smaller firms

By Nathan Sutcliffe

MHA MacIntyre Hudson

THE latest Budget was set against the backdrop of COVID-19 which looks like it will have a significant effect on business.

The Chancellor announced a raft of measures intended to shore up small and medium-size businesses which are expected to bear the brunt of the drop in demand and supply chain disruption. Outside of that, there were a number of measures relevant to businesses which I’ve highlighted below.

1. The corporation tax rate is confirmed to continue at 19 per cent and is not to drop to 17 per cent as previously expected. I wonder whether that gives the Government room to manoeuvre in the event Brexit negotiations don’t go to plan!

2. First Year Allowances, which provide 100 per cent tax relief for the cost of a purchase, will be extended to 2025 for electric cars and certain low emission goods vehicles. Tied in with the drop in benefit-in-kind rates on electric cars, this will provide some certainty to employers looking to invest in electric company cars over the next few years.

3. For large companies investing in research and development, the R&D tax credit has increased from 12 per cent to 13 per cent. This will give an additional cash boost to those companies.

4. Businesses who are extending their premises or building new premises will be able to benefit from the rate of the new Structures & Buildings Allowances being increased from two per cent to three per cent. This allowance gives tax relief on the cost of building (as opposed to the fixtures and fittings within a property). Obtaining good information from contractors at the time of the build will remain the most efficient way to maximise these tax relief claims.

Whilst these were broadly positive announcements for business, we must remember there are challenges coming from previous Budgets. Most significantly, the extension of the IR35 rules from 1 April 2020 to put the compliance onus on larger private companies is still causing problems.

Finally, a significant additional cost to businesses, particularly in the retail and hospitality sectors, comes from the increases in the National Living Wage. The increase to £8.71 per hour from 1 April 2020 and the Government’s ambition to increase this to £10.50 by 2024 is great news for lower paid workers but businesses will need to consider how this will affect their finances.

If you would like to discuss any of the changes announced in the Budget, Nathan Sutcliffe can be contacted on 01604 624011 or at or visit www.macintyrehudson.co.uk

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