Budget 2020

Budget 2020: The Business Impact

It comes as no surprise that yesterday’s Budget was dominated by government plans to battle coronavirus. In his first Budget delivery, Chancellor Rishi Sunak, focused heavily on the virus whilst announcing financial and tax plans for the coming year.

As part of the Budget, the Chancellor shone a light on some key business issues. In this piece, we’ve summarised the main points.

Business rates are to be abolished for small shops

Eligible businesses will pay no business rates in the coming financial year. The Chancellor said that businesses such as those in the hospitality sector would be badly affected by the Corona virus outbreak, so additional support in the form of a tax break was necessary.

Businesses valued under £51,000 are eligible with Sunak claiming the break will be worth over £1bn, saving each business up to £25,000.

Small businesses have been promised a £3,000 cash grant

If your business is currently in receipt of small business rates relief you will receive a £3,000 cash grant. The Chancellor explained that this will see £2bn allocated to 700,000 UK firms.

Increase in pollution taxes

Unsurprisingly, the Chancellor said the government will be increasing taxes on pollution.

As electricity is now ‘cleaner’ than gas, tax rates for the fuel sources are to be revised. The Climate Change Levy taxes are to be frozen whilst the gas levy rate is to be increased.

The Chancellor has pledged to support energy intensive industries by extending the climate change agreement for a further two years in an attempt to get the industries to net zero.

In addition, the government will introduce a charge that will affect manufacturers producing packaging that is not made with less than 30% recycled plastic. The charge of £200 per tonne will also apply to importers and will result in 200,000 tonnes of carbon saved.

Sunak confirmed the tax loophole around red diesel will end in 2022. The loophole has allowed diesel users to pay less fuel tax. Businesses in the agricultural, fishing, rail and heating trades will continue to be exempt for the foreseeable future.

Boost for electric vehicle charging

There is to be an injection of £500m to aid with the roll out of rapid charging points for electric vehicles.

And, with the government planning to change taxes and costs to make electric vehicles more accessible, it is only a matter of time before charging points in your business are a necessity.

Entrepreneurs’ Relief will continue

Entrepreneurs’ Relief applies when a business owner sells part of or all their business and is able to pay a reduced tax rate on profits gained.

Going forward, business sellers will pay 10% on lifetime gains of up to the value of £1m. Previously, the reduced tax rate of 10% applied up to the value of £10m; however now, if you’re selling your business and gain more than £1m you’ll pay the standard tax rate, which is 20%.

Good news for pubs

The current business rates discount for pubs of £1,000 is to be increased to £5,000. Duties on alcohol are also going to be frozen for the coming year.

Further education colleges get funding

Further education colleges will get £1.5bn to upgrade their buildings. This will aid in improving energy efficiency in public buildings.

There will be a further investment of £400m for research and development. This amount will provide investment to areas outside of the South East.

Sick pay refunds for small businesses

Businesses with less than 250 staff will be refunded for sick pay payments for two weeks. All staff advised to isolate will be entitled to sick pay. If you are self-employed, you are able to claim contributory Employment Support Allowance. These payments are now applicable from day one rather than day five of sickness.

There will also be ‘business interruption’ loans available up to the value of £1.2m.  Again, this is to help mitigate the impact of coronavirus on businesses.

 

For more helpful info on your business, please visit our Business Advice Hub.

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Paul JohnsonGroup Financial Director

Paul Johnson is very much a home-grown talent.

He joined Great Annual Savings Group in its infancy, fresh from a youth career as a professional footballer with Hartlepool United.  He quickly established a reputation within the business and aced all required accountancy qualifications in the space of four years to become the Group’s Management Accountant.

Several successful projects later, Paul was promoted to Head of Finance.  When the former FD left GAS, he took on the mantle of the business’ most senior finance professional; boasting a string of incredible achievements all under the age of 30.

Quote:

“I have witnessed phenomenal growth at the Group over the many years I’ve worked here and I’m looking forward to guiding the Group into an exciting new chapter.”

Interesting fact:

Paul made his professional debut for Hartlepool United against Bournemouth in the Football League.  Some say Danny Ings still resides in his pocket to this day.

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