How the Budget will Affect Your Small Business
The latest budget statement contained some important takeaways for small business owners and freelancers.
Understandably given the circumstances, many of the announcements were made in response to the economic threat posed by the COVID 19 outbreak.
We’ve provided a handy summary of the most important announcements below.
Coronavirus stimulus package
As well as its potential to threaten lives, the coronavirus outbreak could also damage the economy. A large part of the Chancellor’s budget statement focused on a range of policy measures designed to minimise its impact.
The central focus of these measures is to provide short-term cashflow relief for affected businesses. They include:
- Small firms in the retail, leisure and hospitality sectors will see their business rates abolished for one year if they have a rateable value below £51,000
- Small firms will be able to access “business interruption” loans of up to £1.2m
- Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks
- Self-employed workers that are not eligible for sick pay if they need to self-isolate will be entitled to claim Employment Support Allowance.
Any limited company contractors that were hoping to see private-sector IR35 reforms dropped before the April deadline will be disappointed to learn that the changes will go ahead, despite warnings from key stakeholders.
It was widely rumoured that the Chancellor would abolish Entrepreneurs’ Relief, eliminating a benefit that helps limited company bosses to wind up tax efficiently. Instead, the lifetime limit on eligible gains was reduced from £10m to £1m. It is estimated that this change won’t affect 80% of those that access the relief.
As well as the coronavirus-related business rate suspension, the government will review High Street business rates later this year. The business rate discount for pubs will also rise from £1,000 to £5,000.
VAT on all digital publications, including newspapers, e-books and academic journals will be scrapped from December.
National Insurance Contributions
The Chancellor confirmed that the threshold on employee National Insurance Contributions would increase to £9,500 per year.
Initial speculation that Fuel Duty would rise was proved wrong as the Chancellor confirmed that it would remain frozen.
Alcohol and cigarettes
Duties on spirits, beer, cider and wine will be frozen, while tobacco taxes will increase by 2% over the rate of retail price inflation.
Small businesses and contractors working in public sector may be able to benefit from large infrastructure projects. New projects include road improvements and installing broadband infrastructure in rural areas.
For more information about how the budget might affect your business, speak to a member of the team today. Call: 0808 501 7054.