Chancellor Corona Budget Special
16 March 2020
Rishi Sunak delivered his first budget in what he described as “budget for security today and prosperity tomorrow”. In my opinion I would say it was well delivered budget as often in the past I feel they have been poorly presented.
This is a special budget in the sense it has been designed to get us through the Corona Virus pandemic we are currently facing. The measures were a split between short-term assistance to business and individuals to cover what he said would be the temporary disruption caused by the coronavirus and medium-term measures to take the economy forward.
Here is a summary of the temporary measures: –
- Drop-in interest rates from the Bank of England
- Changes to statutory sick pay and the fact that the government would underwrite the cost of coronavirus sick pay (for up to two weeks) for businesses with less than 250 employees (as at 28 February 2020)
- Reduction in business rates for certain sectors including, retail, leisure and hospitality
- Access to business interruption loans of up to £1.2 million with 80% government security
- The recommencing of time to pay from HMRC.
- A £3,000 grant to businesses eligible for small business rates relief
Here is a summary of the Tax Saving Measures:
- Increasing the point at which pension contributions taper starts
- Increasing National Insurance starting point to £9,500 (up from £8,632)
- Increasing the Structures and buildings allowance rate
- Increasing R & D Credit to 13% (up from 12%)
- Increasing Employment allowance to £4,000 (up from £3,000)
Other good news:
The Chancellor also promised the NHS would get whatever it needed and anticipates NHS would require would amount to some £30 billion.
Investment in charge points for electric cars, with the aim of never being more than 30 miles away from a charge point. This news along with the nil rate BIK tax on pure electric cars makes this a perfect time to go green and buy a company car through the business.
Now for the bad news
- The election manifesto promised corporation tax rate cut from 19% to 17%, but this would now remain at 19%.
- Entrepreneurs relief to be scaled back from £10m lifetime allowance to £1m with immediate effect.
Although no one likes to pay tax the bad news above is not as bad as it could have been. The corporation tax saving would have been a bonus, but you can’t have your cake and eat it. The cut back of Entrepreneurs relief only affects a handful of people. The majority of taxpayers making the claim for the relief will not be affected.
As accountants to small businesses we are pleased with the outcome of the budget. It is great to see the government acknowledge and support us small businesses through these difficult times.