Budget offers welcome relief amid COVID-19

On 11 March, Chancellor Rishi Sunak announced a raft of measures designed to help businesses and individuals amid the coronavirus outbreak.

Media headlines have focused on the £5 billion coronavirus response fund to bolster the NHS and other public services. An additional £7 billion in support for employers and employees will help mitigate the impact of reduced trading and income.

Here are the 4 main headlines our clients should be aware of:

  • Business rate discounts are increasing and extending – small businesses won’t have to pay any rates for 2020-2021. There are also new grants and loans available to help manage coronavirus-related losses
  • Extended access to Statutory Sick Pay – the Treasury will underwrite this to reduce the burden on businesses. Anyone diagnosed, self-isolating or caring for a relative will be eligible, with no sick note required
  • Tax payment delays – the Treasury is expanding the Time to Pay system, so companies and sole traders can defer tax payments without incurring penalties or interest
  • Increase in the Research and Development Expenditure Credit (RDEC) – the tax credit rate will rise by 1% to 13% from 1 April 2020. Businesses receive this as an above-the-line credit for qualifying R&D

Other noteworthy announcements include:

  • Reduction in the Entrepreneurs’ Relief lifetime limit – from £10 million to £1 million. This was in the Government’s manifesto so isn’t unexpected, but the magnitude and immediate implementation were surprising. No other consultations to reform the relief were announced
  • Increase in Employment Allowance – from £3,000 to £4,000, with effect from 6 April 2020. At this point, Employment Allowance will count towards the total aid entitlement under the relevant de minimis state aid cap. Most companies won’t have received de minimis state aid before, so don’t need further checks to determine Employment Allowance eligibility. If you have questions about this, get in touch
  • Increase in Structures and Buildings Allowance rates – from 2% to 3%. The changes take effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax
  • Increase to National Insurance thresholds – most are rising with inflation, but two (primary threshold and lower profits limit) will rise by 10%
  • Introduction of off-payroll working for the private sector – the Budget confirmed these changes (also known as IR35) are being introduced from 6 April 2020

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