What Does the Spring Budget 2020 Mean for Small Businesses?
The recent Spring Budget was a budget of many firsts. It was the first Budget of a new decade, the first Budget since we officially left the European Union and also the first announced from the new Chancellor, Rishi Sunak.
Naturally, this has meant that businesses and individuals have been anxiously anticipating exactly what would be announced and how it would affect them.
In this post, we’ve rounded up some of the biggest announcements and how they could affect small businesses in the UK.
Reimbursed sick pay
Taking centre stage in this year’s Budget was mention of the Coronavirus (COVID-19). Rishi Sunak announced several promises regarding funding to tackle the impact of the virus on the population and the economy.
With people worried about missing work, Mr Sunak announced that Statutory Sick Pay will be available for all who self-isolate because of the Coronavirus. For businesses worried about how this will affect them, the Government has promised to refund the cost to small businesses for up to 14 days of sick pay - which will cost £2 billion in total.
Business rates cut
If you work in the hospitality industry, there was some great news regarding business rates. Business rates will be scrapped from next year for hospitality businesses, venue owners, cinemas and galleries who have a rateable value of up to £51,000.
For businesses with a rateable value below £15,000, you will receive a cash grant of £3,000 as well as the 100% discount on business rates.
This tax cut will be welcome news for many small businesses in this sector, who will save an estimated £25,000 each. However, if you have a business in an expensive area such as London or run a large retail store, you may be feeling a bit left out.
R&D investment boost
The Government announced an increase in Research and Development (R&D) investment to £22 billion per year by 2024-25. This is welcome news for those working with science and technology industries and exceeds the previous targets set out by the Government.
If you qualify for R&D tax relief, you could save thousands on your tax bill - so it’s always worth getting the advice of an accountant if you think you might be eligible.
National Living Wage rises
Another key part of the budget which will affect businesses was the announcement that the National Living Wage will rise to £10.50 by 2024. For this year, the wage was increased to £8.72 an hour - a 6.2% increase that businesses will have to factor into their upcoming salary budgets.
The National Living Wage will also be extended to workers aged 21 and over by the year 2024.
Employment Allowance to increase
For anyone worried about the salary increases, there’s another announcement to take notice of which will save you some money. The Government has planned an increase to the Employment Allowance.
Previously, you could get up to £3,000 a year deducted from your Class 1 National Insurance bill if you’re an employer. This will now be increased so small businesses could save up to £4,000 a year from now on.
No Corporation Tax cut
For those hoping for a Corporation Tax cut, there’s some bad news. The current rate will remain in place for now. However, this should help to bring an extra £6 billion into the Treasury.
While this certainly doesn’t cover everything announced in this year’s Spring Budget, these are some of the key points that small businesses need to know about for the year ahead.
If you need any advice on what the Spring Budget means for your business and/or accounts, don’t hesitate to get in touch with Countplus today on 01925 670289.