Following Chancellor Rishi Sunak’s Budget announcement yesterday, we’ve highlighted the key changes that will impact on small and medium businesses and their owners.
For SMEs (meaning businesses with 250 or fewer staff), the cost of Statutory Sick Pay will be refunded in full for 14 days if employees are off work because of coronavirus. Meanwhile, a new Coronavirus Business Interruption Loan Scheme will provide loans of up to £1.2m for small and medium sized businesses, covering up to 80% of losses. Those qualifying for Small Business Rates Relief will receive a £3,000 cash grant per business.
Entrepreneurs’ Relief, the future of which has hung in the balance in recent months, is to have its Lifetime Allowance drastically reduced from £10m to £1m, in a move projected to save £6bn over the next five years.
In other areas, Employment Allowance has had a major boost from £3,000 to £4,000, while the rate of Structures and Buildings Allowance is up from 2% to 3% pa. R&D Tax Credit has been increased from 12% to 13% of qualifying R&D expenditure. Interestingly, too, VAT is to be abolished on digital publications such as magazines, newspapers, books and academic journals.
From April 2022, a new plastic packaging tax of £200 per ton will apply to packaging that contains less than 30% recycled materials. Mr. Sunak also confirmed that Corporation Tax is to remain at 19%. Tax Relief on red diesel is to be abolished except for certain industries, such as agriculture, and a new SDLT surcharge of 2% will be introduced from next year for non-UK residents buying property in the UK.
Kirsty Horobin, Tax Consultant at Newby Castleman, said: “Overall, the Budget is favourable for individuals as well as small and medium sized businesses, with tax credit and allowance increases, loans and grants across the board.
“It remains to be seen how funding for all of the above will be sourced, but provided the government follows through on its pledges, today’s announcement will come to represent one of the most generous Budgets for businesses in recent years.”