In the first Budget of the decade and the first one in over 50 years outside of the EU, the new Chancellor, Rishi Sunak, appeared to unveil, against the backdrop of the ever-growing Coronavirus outbreak, a series of giveaways. This was headed by a £30million investment to mitigate the impact of the virus.

Initiatives were announced to 'boost small businesses and tackle climate change'.  However, these changes will be partly funded by a reduction in Entrepreneurs’ Relief lifetime limit from £10million to £1million and from the abandonment of the reduction of corporation tax rate from 19% to 17% - an area that was due to be an advantage to many small to medium sized owner managed companies. It is worth noting however, that by comparison to other countries, this rate does still remain competitive.

The other main changes included:

• for this year, business rates in England will be abolished for eligible businesses in the retail, leisure and hospitality sectors with a rateable value below £51,000
• pension allowance thresholds will be increased by £90,000 each - thus the threshold income will now be £200,000 rather than £110,000 and the adjusted income from £150,000 to £240,000
• also for this year, a £3,000 cash grant per business that is currently eligible for the small business rates relief, as well as an increase in the business rate discount for pubs from £1,000 to £5,000
• increasing public investment in R&D to a record £22billion a year
• increasing the rate of Research & Development Expenditure Credit from 12% to 13%.
• self employed who are not eligible for sick pay usually, will be able to claim contributory Employment Support Allowance immediately if required to self isolate for coronavirus
• an increase in the NIC Employment Allowance, from £3,000 to £4,000 - effective from April 2020 - plus an increase in the NIC threshold to £9,500 for employees
• small firms will be able to access ‘business interruption’ loans, up to £1.2million
• SSP cost reclaimable for employers (with under 250 employees) for any employee who has to be off work to self isolate for coronavirus from day 1 up to 14 days
• increase in capital allowances – structures and buildings allowance – from 2% to 3% per annum
• VAT on digital publications being abolished from 1 December 2020
• beer, wine and spirits duties frozen
• abolition of the planned reduction of the corporation tax rate to 17%
• entrepreneurs relief remains, with a reduced limit from £10m to £1m for disposals after budget day
• fuel duty to be frozen
• plastic packaging tax to come into force
• subsidies for fuel used in off road vehicles (known as red diesel) will be scrapped for most sectors in two years time (red diesel subsidies will remain for farmers and rail operators)
• continued focus on aggressive tax avoidance
• improved ‘Time to Pay’ arrangements to help taxpayers affected by COVID-19

The Chancellor said that he intended this Budget to promote a feeling of ‘security today’ and ‘prosperity tomorrow’ – and our initial reaction is positive in that he has addressed some of the key immediate concerns facing 2020 in terms of coronavirus and the impact upon businesses the self employed and employers.  

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