16 Mar How Might the Spring Budget Impact Your Business?
The British Government have delivered their Spring Budget for 2020. This will have a number of key implications for businesses, particularly in this time of economic uncertainty arising from the current COVID-19 outbreak. We’ve summarised some of the key points that could affect your business below.
Coronavirus Action Plan
Rising concern over the spread of coronavirus is likely to have a significant impact on businesses, for example due to self-isolation of staff and a downturn in economic activity in the retail, leisure and hospitality industries. The budget accommodates for this in the following ways:
- Anyone who self-isolates will be entitled to statutory sick pay, even if they do not have any symptoms. This will be available from day one of sick leave.
- Self-employed workers who are not eligible for statutory sick pay will be entitled to claim contributory Employment Support Allowance.
- Businesses with fewer than 250 members of staff will be refunded for two weeks’ sick payments.
- Small firms will have access to loans of up to £1.2 million to prevent ‘business interruption’.
- Business rates will be abolished in England for companies that are in the retail, leisure and hospitality sectors, and which have a rateable value less than £51,000.
Personal Tax, Wages and Pensions
There were relatively few new announcements relating to income tax and VAT, however the following key changes were introduced:
- The tax threshold for National Insurance Contributions will increase from £8,632 to £9,500.
- There will also be an increase to the thresholds for tapering provisions to the pensions annual allowance.
Alcohol, Tobacco and Fuel
Fuel duty is set to be frozen again, while the alcohol industry will receive an unanticipated windfall:
- Fuel duty will be frozen for the 10th consecutive year.
- Duties on spirits, beer, cider and wine will be frozen.
- Business rate discounts for pubs to rise from £1,000 to £5,000 this year.
Business and Digital
A number of changes will be introduced specifically affecting businesses, as well as planned improvements to broadband connectivity which will affect those in remote locations:
- Firms eligible for small business rates relief will receive £3,000 in cash grants.
- Structures and Buildings Allowance will increase to 3%.
- Research & Development Expenditure Credit (RDEC) will increase to 13%.
- Restrictions on Corporate Capital Loss Relief will be introduced.
- £5bn was allocated to introduce gigabit-capable broadband into the hardest-to-reach places.
A key change to be introduced is a dramatic reduction in the lifetime allowance for Entrepreneur’s Relief:
- The lifetime allowance for Entrepreneurs’ Relief will be reduced from £10m to £1m.
- This change will come into effect immediately and can, in certain circumstances, impact on transactions prior to 11th March.
Environment and Energy
A number of changes have been made to financially incentivise sustainable business practices, including those relating to fuel subsidies and plastic packaging:
- Plastic packaging tax to come into force from April 2022.
- Manufacturers and importers whose products have less than 30% recyclable material will be charged £200 per tonne.
- ‘Red Diesel’ subsidies for fuel used in off-road vehicles will be scrapped for ‘most sectors’ in two years’ time, however this will not apply to farmers or rail operators.
The Economy and Public Finances
The economy is predicted to grow at the slowest rate since 2009, while inflation is forecasted at 1.4%:
- The economy is predicted to grow by 1.1% this year, not taking into account the impact of coronavirus. This would be the slowest growth since 2009.
- Inflation is forecasted at 1.4% this year, increasing to 1.8% in 2021-2022.
If you’d like to learn more about how these changes could affect your business, then please get in touch by telephoning the office on 01573 225082 or emailing firstname.lastname@example.org.