Rishi Sunak has delivered his first budget, announcing the government’s spending plans and taxes for the year ahead. A huge £30bn package has been established to help UK businesses through the challenging times ahead. To help you understand the key points, we take a look at what it means for businesses here in the UK.
Coronavirus sick pay to be covered for SMEs
Unsurprisingly, many of the key points to note in the budget are relating to the spread of coronavirus. Sunak warned that calculations predict up to 20% of the working population will be unable to work due to coronavirus. To ease this pressure, the government has announced statutory sick pay for all individuals which are advised to self-isolate, with the statutory amount refunded for up to 14 days to small and medium sized businesses. This will only apply to businesses which have fewer than 250 employees.
Business lending during challenging times
The government also announced the Coronavirus Business Interruption Loan Scheme, designed to provide a pot of £1bn to aid smaller businesses. This will be facilitated by the government acting as a guarantor for bank loans up to a maximum of £1.2m, with the government willing to cover potential losses by up to 80%. It is expected that coronavirus will cause a temporary disruption to the economy, so for small businesses the availability of sick pay, loans and cash injections will come as a welcome relief.
Business rate relief
One of the most important announcements for businesses is the abolishment of business rates for smaller businesses within the retail, hospitality and leisure industries. This tax cut will only apply to businesses with a rateable value below £51,000 and is designed to cushion the potential fall in demand until the end of the year. If a small business is not liable to pay business rates, they will be eligible to receive a cash grant of £3,000. This is a £2bn cash injection, which will help 700,000 businesses.
In addition, the chancellor announced a 90% reduction in entrepreneurs tax relief, which will be used instead to inject funds into other corporate tax cuts. This is a sensible middle ground, with funds raised for the government while continuing to encourage investment into businesses. Roughly 80% of small businesses will be unaffected by the reform, however it is predicted to save £6bn over the next 5 years.
Start-up loans to help continue funding growth
£130m of funding has been promised to start-ups looking for loans, as well as £5bn to businesses which are looking to expand into exporting. When combined with the announced from the Bank of England that interest rates will be cut from 0.75% to 0.25%, the overall cost of borrowing is expected to fall.
Time to pay service for those struggling with Tax payments
To help businesses struggling this year due to the potential impact on the economy, the HMRC Time to Pay service will be scaled up. This will enable businesses and those who are self-employed to defer tax payments. The aim is to create greater leg room and improve cash flow, especially if there is a shortfall in supplies and the number of employees being fit for work.
This temporary reduction in rates and cash injections are designed to create a safety net for businesses across the country. However, so far, no timescales have been announced for the compensation of sick pay or cash injection payments. It is important to the economy and to businesses here in the UK that these payments are swift, however if your business is struggling, we may be able to help.
Fuel duty to remain frozen
This will come as a welcome relief for logistic businesses and those who reply heavily on transportation within their business. With the global events and market activity playing a part on the cost of fuel prices, it’s reassuring to know that this remains unchanged.
We’re here to help
We understand that as business owners, we’re facing challenging times. From erratic consumer behaviour, short term cashflow issues to remaining operational and trying to conduct business as usual, this period is going to see many businesses go through testing times.
Now, more than ever is an imperative time to look at your business finances, scrutinise your cashflow and look at ways you can help save your business money.
Here at BusinessComparison, we specialise in helping businesses access the best rates for a variety of financial products. If your business needs a competitive business loan, assistance cutting costs on energy or to understand if you can upgrade and reduce the cost of your connectivity and telecoms, we can help you compare the available deals.
To find out more about our services, please contact our experienced team today.