Today Rishi Sunak announced the delayed Budget which had been postponed from autumn 2019. Here’s what your small or medium business needs to know.
Unsurprisingly the current pandemic – Covid-19 – had a dominant presence in the Budget today. However it did feel shoe-horned in at the last minute, with a general coverall message of ‘the NHS will get whatever it needs’.
As announced last week, SSP will be available from day 1 for an employee who has been recommended to self-isolate whereas it usually only applies from day 4, more information on that here. It has not been clarified yet whether or not those on zero hour contracts, or who don’t meet the minimum threshold for SSP will be included in this update.
In addition, small businesses (fewer than 250 employees) will be able to access a refund for sick pay for up to 14 days for any employee.
Bank loans of up to £1.2m will also be available to help businesses survive this challenge, 80% of which will be covered by the Government.
Finally, business rates will be completely abolished for small retail, leisure and hospitality to help ease the burden of potential slower business or closures. It’s assumed this will be available for the 2020/21 tax year, though we will seek clarification.
Interestingly the Government announced that the planned cut to Corporation Tax, expected to help attract businesses post-Brexit will no longer go ahead – and they claimed this measure is a response to the coronavirus pandemic.
The planned Corporation Tax cut from 19% to 17% will now not go ahead. Corporation Tax will remain at 19%.
One area we’re pleased to announce changes to is the tapered annual pension allowance, which was heavily affecting critical NHS staff. The Government has decided to increase the tapered allowance threshold for pensions tax relief to £200,000. This means that fewer doctors and consultants will be taxed unfairly on their earnings, and will hopefully encourage senior NHS clinicians to feel they can take on extra hours or promotions without resulting in a tax bill which means they are worse off overall.
However this move has been heavily criticised already. Why not simplify the overly complex tax system by abolishing this all together if it has caused such a problem and will now only apply to a tiny percentage of taxpayers?
IR35 Private Sector
Surprisingly there was no mention of IR35 or measures to help businesses navigate IR35 reform in the private sector. As such we understand it is going ahead as planned with the revised promise of a soft landing period to help businesses adapt to the changes being made.
Additional funding was, however, announced for the HMRC compliance team to collect an additional £4.4bn, and we’re sure that we will see repercussions from this as we go.
PAYE & National Insurance
As expected, an increase in national and living wages was announced today, as well as an increase to the NI threshold.
- The National Insurance contribution threshold will be increased to £9,500 from £8,632
- The National Living Wage will be increased from £8.21 per hour to £8.72 per hour from April 1
- The National Living Wage will increase to £10.50 by 2024
Employment Allowance will be increased from £3000 to £4000 allowing employers to reduce their annual secondary Class 1 NIC bill.
Updated taxes and Reliefs
We also have a few updates to other taxes and reliefs which may be relevant. The Entrepreneurs relief which has come under scrutiny will not be completely abolished, but it will be severely reduced from £10 million to just £1 million.
There will be a new plastic tax for packaging containing less than 30% recycled materials of £200/tonne.
Fuel duty will remain frozen.
If you believe any of the above will affect your business finances please get in touch with your accountant to discuss.