“This is a pro-small business Budget, which has delivered a high streets bonus, a series of conservative manifesto promises to small businesses, and emergency steps to support small firms through the Coronavirus outbreak.”
He also mentioned that “covering the cost of Statutory Sick Payand emergency measures for the self-employed are particularly welcome. Removing the minimum income floor for those on Universal Credit will bring help to those working hard to keep their businesses going. These are vital contingencies for the UK’s 5.8 million-strong small business and self-employed community. There may need to be further steps in the weeks and months ahead.”
This means that SMEs should be receiving the help they need to deal with the possible impacts of self-isolation and school closures, and the economic challenge posed by the Coronavirus, which was also officially declared a pandemic yesterday.
The measures that have been put in place, include a £12bn plan which promised to do a number of things including:
Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks.
The Bank of England has announced an emergency cut in interest rates from 0.75% to 025% in a bid to support the economy during the virus outbreak.
£1bn of lending via a government-backed loan scheme, with government backing 80% of losses on bank lending.
Business rates will be abolished altogether for this year for firms in retail, leisure and hospitality sectors with a rateable value below £51,000.
Deferral of tax payments – a dedicated helpline will be set up for those who need a deferral period on their tax liabilities.
Self-employed workers who are not eligible will be able to claim contributory Employment Support Allowance. This “new style” Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice from the first day of sickness, rather than the eighth day.
There was promise of extra spending on new roads, and repair of the old, including the A303 around Stonehenge; spending on rail services, housing, the NHS, education and freezing of fuel and alcohol duty. There were also some key omissions. Little was said about social care, which is under huge strain, and nothing was said about IR35 apart from a vague hint about what HMRC will do. However on closer inspection of the documents IR35 will go ahead despite huge lobbying from those freelancers across many sectors including the media, IT, care etc. Also little was said about the child care sector – and that might really matter if Covid-19 reaches the predicted peak.
We’ve asked some of Swindon and Wiltshire’s business owners for their reactions to the Budget.
Angela Ashworth, Director, and Co-Founder ofPurple Limesaid, “The combination of these should help business owners to steer a path through what is being described as a temporary economic uncertainty.
“However the devil is always in the detail and we do not yet know the full criteria that would need to be met in each instance.
“More will follow, as will further administration for SMEs on the back of it…”
Angela shared some of what she found positive for SMEs:
Temporary Coronavirus Business Interruption Loan Scheme – crucially government will guarantee up to 80% of the loan – thus giving the bank confidence to lend
HMRC to scale up Time to Pay – enabling you to reach mutual agreement with HMRC on a repayment plan if you need to.
SSP – 14 days paid if the recommendation is to self isolate – SMEs will not bear the cost of this – the government will.
For those who are already eligible for small business rates relief – a cash grant of £3000 will be available.
Reacting to the Chancellor’s budget,Phil Smith, Managing Director ofBusiness Westcommented, “Given the growing scale of the impact of Coronavirus on the global economy – and also its likely impact on the UK – a strong statement of intent from the Chancellor is absolutely the right thing to do”.
“The scale of the response was impressive. If the past few weeks has been about turning on the taps to wash our hands, here was the Chancellor turning on the UK’s fiscal taps to try and avoid the worst. It also shows welcome co-ordination with the Bank of England to help provide support direct to businesses and indirectly to their workers”.
“For business his message was that this support would act as a ‘bridge’ to help cope with one-off stresses and make it through to a resumption of normality. When many businesses are feeling worried about how to cope, Rishi Sunak’s proactive firepower will be very welcome”.
“This was a big spending budget in the short, medium and long term, and although some of the measures were populist – with freezes on all alcohol duties – most of the money would be on capital expenditure: particularly on infrastructure. Much of this is very sensible. The UK has under spent on infrastructure for far too long – pursing a penny wise, pound-foolish strategy. With global borrowing so cheap it makes sense to increase our spending on transport, housing, broadband, skills and research and development – all of which have the potential to boost long-term growth”.
“This included welcome name checks for improving the A417 in Gloucestershire and the A303 near Salisbury, and new investment in roads, rail, University research and a ‘New Blue Skies funding agency’ modelled on the American ARPA. There was stress on business innovation and international trade, with new trade envoys announced for the West of England and Wales around the world”.
“However, there remains a daunting global backdrop. No one yet knows how big a shock Coronavirus will bring us. Today the ONS had already announced that growth from January to March had stalled to zero. The government’s growth projections had also been shrinking, even before Coronavirus had been taken into account. And we still face major changes in our global trading relationships, and with the EU, when the transition period ends on the 31st of December”.
“Some will therefore be nervous that this budget could be a hostage to fortune, reliant on continued benign global interest rates, a rapid return to growth, and with a needed claw back through higher taxes in two or three years’ time. A short-term boost to help the UK out of a difficult place, we now place our faith that the future will take care of itself”.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking said, “Improved infrastructure and connectivity is so important for the South West and something that was recognised by a quarter of the region’s businesses as a top priority for today’s Budget. The Chancellor’s announcement that the A303 will receive investment among the £600billion promised for infrastructure funding will be particularly welcomed across the South West. Connecting the region to London and the South East is vital to boosting economic growth, something we look forward to once these infrastructure improvements have been made”.
Nicki Kinton, of Swindon-based business Confident Cashflow, was less impressed and felt the Budget didn’t seem to address longer term support for small businesses, especially around late payment. She said, “It was a budget of spending. With commitments on infrastructure, environment and science, which naturally all impact on businesses big and small. But the big focus was on responding to Coronavirus, which, aside from some temporary relief on business rates for some sectors and the very welcome rebate on Statutory Sick Pay for small businesses, has trumped any potential action that could have been taken to stimulate growth and improve the cash flow of the nation’s small businesses.”
Chris Goodchild, of SupportWise IT Support, said, “I am very happy to hear about the £5bn investment for Gigabit broadband across the hardest to reach parts of the UK. In an ever-connected world, everybody should have access to high-speed Internet.
“As a small business, the abolishment of business rates is great news. This will help stores on high streets and with the extension of the retail discount to certain other sectors (such as museums and small B&Bs) will help those hardest hits.
“Coronavirus – giving the NHS what it needs, no matter what the cost is the right attitude to take. This, with the £500m invested for councils who have been the most affected will allow us to recover more quickly.
“The continued investment in Science (with the Science Institute being granted a £1.4b finance boost) as well as an extra £900m dedicated to Space, Nuclear Fusion and Electric Cars shows the current government are committed to UK being at the forefront of future technologies.
“While light on green measures, a plastics tax and a levy on firms who have less than 30% recyclable materials will hopefully push businesses to change the way products are presented to the consumer. With a rise in shops offering the option to refill containers with their products, could this become more of a norm such as in Canada/US and France?”
The three main points, Neil Moore of Moore Photographics gleaned from a “self employed business” point of view are:
Coronavirus “It will be interesting to see how easy it is to claim the new Employment support Allowance.
Growth “At 1.1% growth during 2020 means another exceptionally hard year, and the further predictions don’t look helpful for the following years either.
Business support “It will be interesting to see who will be eligible for the government-backed loan schemes, and how quickly they are made available.”
Martin Gurney, tax partner with Haines Watts Swindon, said, “As with all Budget announcements, the devil is in the detail and therefore we will see further information and commentary emerging over the next few days.
“The core of our client base is owner-managed business and high wealth individuals. For those groups, there were a few important measures:
Support for the business costs of Coronavirus
*Maintaining the rate of corporation tax – chargeable at 19%
*Increase in the Employment Allowance – an increase from £3,000 to £4,000
*Reduction in annual pension contribution “tapering” – the threshold for tapering will increase from £110,000 to £200,000
*Increase in Research and Development Expenditure Credit (RDEC) – an increase from 12% to 13%
*Business rate relief in retail, leisure and hospitality sectors – for property with a rateable value of less than £51,000
*Reduction in Entrepreneurs’ Relief for Capital Gains – the gains upon which Entrepreneurs’ Relief may be claimed is reduced from £10m to £1m
*Removal of red diesel relief –removed across various sectors with protection for farming and other industries.
“The Chancellor suggested Entrepreneurs’ Relief was not actually an incentive to, or being significantly accessed by, entrepreneurs. I would disagree. We will be looking at the measures closely and also at how we can best protect our clients’ wealth and ability to access and maximise the relief.
“There will be lots more detail to come in the next few days. In the meantime, we are focussing on safe working practices to protect staff and clients from the impact of Coronavirus in order to provide an uninterrupted service.”