On 11 March 2020, Chancellor Rishi Sunak delivered his first Budget in the House of Commons, announcing the government’s tax and spending plans for the year ahead. Here are some key headlines for businesses:
- Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with Government advice.
- This is in addition to the change announced by the Prime Minister that SSP will be payable from day 1 instead of day 4 for affected individuals.
- Those who are not eligible for SSP can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance.
- The government will bring forward legislation to allow small- and medium-sized businesses (employers with fewer than 250 employees as of 28 February 2020) and employers to reclaim SSP paid for sickness absence due to COVID-19. This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19. Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
- The government will increase the Business Rates retail discount to 100% for one year and expand it to the leisure and hospitality sectors, and increase the planned rates discount for pubs to £5,000. Taken together with existing small business rate relief (which provides full relief for businesses using a single property with a rateable value (RV) of £12,000 or less), an estimated 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020/21. Note: For those with RVs of between £12,500 and £51,000, it will lower their costs compared to the current year. However, for businesses with RVs of over £51,000, nothing changes.
- The government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs.
- A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch in a matter of weeks to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.
- A new pubs discount will be introduced to take £5,000 off the business rates bills of eligible pubs with a rateable value below £100,000.
- The Employment Allowance for Employer National Insurance Contributions is increasing from £3,000 to £4,000.
- Corporation tax rate will remain at 19% in 2020, the lowest in the G20.
- The Structures and Buildings Allowance for Corporation Tax will be increased from 2% to 3%, giving relief on an extra £100,000 next year if you’re buying a building worth £10 million.
- £28m package and up to 10,000 Start-Up Loans to support entrepreneurs and businesses to start
- Firms eligible for small business rates relief will get £3,000 cash grant
- Entrepreneurs’ Relief will be retained, but lifetime allowance will be reduced from £10m to £1m
- £5bn to be spent on getting gigabit-capable broadband into the hardest-to-reach places
- VAT on digital publications, including newspapers, e-books and academic journals, to be scrapped from December
National insurance and national living wage
- The government is increasing National Insurance Contribution thresholds from £8,632 to £9,500 from April.
- The National Living Wage will increase from £8.21 to £8.72
UK Economy and employment rates
- The Office for National Statistics (ONS) estimates that the UK economy grew by 1.4% in 2019, 0.1 percentage points higher than in 2018. Delays to the UK’s departure from the EU affected the profile of economic activity throughout 2019, leading to volatility in quarterly growth over the year.
- Growth is distributed unevenly across the UK. England has historically had the highest GDP growth, averaging 2.2% between 1998 and 2018. Over the same period, Wales grew at an average rate of 1.7%, while Scotland and Northern Ireland both grew at an average rate of 1.9%. Growth is also uneven at a regional level – London has seen the fastest growth of all regions, averaging 3.1% between 1998 and 2018, while the North East of England had an average growth rate of 1.5%, the slowest of all regions.
- Employment is at a record high. The number of people aged 16 years and over in paid work was 32.8 million in 2019 and was at a record high of 32.9 million in the three months to December 2019. The employment rate – the proportion of people aged 16 to 64 who are in paid work – also reached a record high of 76.5% in the same period (Chart 1.3). The OBR expects the employment level to increase further over the forecast period, reaching 33.4 million in 2024.
- The unemployment rate – the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed – was 3.8% in the three months to December 2019, the joint-lowest in over 40 years. The OBR expects the annual unemployment rate to remain at 3.8% in 2020 and 2021, before rising to 4.1% by 2024.