budget 2020

Budget 2020 for small business: All you need to know

Victoria Scally News

So the budget has been and gone, on time.  

“Getting the budget 2020, done” was the chancellor’s tag line – just one month into the job. 

Want a TL;DR version of the budget for 2020? Or frankly haven’t the time to sift through all of it to understand what it means for your business in real terms?  Here’s the big hitting headlines:

National Insurance: Employers Allowance

You are up to £1000 better off this tax year. If you make more than £4000 in national insurance contributions on behalf of your employees.

Business Rates: High Street Retail & Pubs

It’s no surprise that the developments around COVID-19 have heavily influenced the budget 2020. We imagine some of these changes were made at the 11th hour. 

Business rates for high streets have effectively been removed on retail properties with a rateable value below £51,000, from April.

Smaller pubs get an extra discount for a year. Hospitality & Leisure businesses will be included in 2021.

Details are still emerging, but it appears if you are a small business in a property with a rateable value less than £15,000, you can apply for a £3000 grant.

The black hole in the grant policy appears to be the small businesses outside of sectors eligible for a retail discount, with values over £15,000.

Statutory sick pay 

Will now be made available on the first day of sickness if your staff have a confirmed case of COVID-19. Before this budget, statutory sick pay would not kick in until day 4.

Small employers will be able to offset the cost of the first 14 days. 

Effectively, the government will be funding it. 

We’re interested to see how this will be done, practically. Guidance will emerge in the coming days.

The budget 2020 document acknowledges this issue. 

National Insurance: Personal

The point at which you start paying National Insurance as an individual has increased to £9500 a year. If you’re self employed this means a saving of around £78.

Additionally, good news for directors of a limited company, who can benefit from increased tax efficiency as a result of this budget 2020. 

Entrepreneurs relief 

Has been cut to £1 million per lifetime. 

In (very brief) terms, the relief currently gives you a 10% tax rate when disposing of a business. 

This will not affect a lot of small business owners, but if you are disposing of a decent size business it could well be a hit.

R&D Tax credits

The R&D tax credit relief will increase by a %. 

This is a great benefit. 

Businesses use this relief when trying new things and is already amazing – so this is great to see continued benefit here.

Corporation Tax

The main rate of corporation tax will stay at 19%. Expected to drop to 17%, so may come as a disappointment for those looking forward to this. 

‘Time to Pay’ additional support

The budget 2020 documents announced a special dedicated COVID-19 helpline to help structure bespoke ‘Time to Pay’ arrangements where businesses can’t pay their taxes. 

They are putting on an additional 2000 call handlers to support the existing service – with set up of a special line.

IR35

One thing that only got a tiny mention was the planned IR35 changes that affect many contracting businesses. The changes appear to be going ahead as planned. 

Personal Allowance

The individual personal allowance didn’t move for the first year in a while – the majority of people can still earn £12,500 a year before paying income tax.

… And we’ll do it all again in August.

Due to a lot of the short term measures in place to help us through COVID-19, it appears there will be a second budget in August – all this excitement to go again!

If you have any questions on any of these on how they’ll affect your business, do get in touch with us. We’re eagerly watching for any firmer updates on some of the more short term changes, so we’ll update as soon as we’re able.