The highly anticipated Budget 2020 has been revealed by the new Chancellor of Exchequer, Rishi Sunak. There was some welcoming news for the small business community as the Chancellor announced the suspension of business rates for SME’s, a Coronavirus Business Interruption Loan Scheme coming into effect and that the Government will be covering the Statutory Sick Pay for SME’s.
Paul Galligan, Chief Executive of Bionic, the business switching service, said: “The new Chancellor has put it all on the line for the UK’s SMEs at a critical time for the UK economy. Delays to the time to pay services, the roll-out of a new Coronavirus Loan Service, the temporary abolishment of business rates for specific sectors and a £3,000 cash injection for small businesses across the country will create a much-needed safety net for hard-working SMEs up and down the country.”
“It remains to be seen how quickly businesses can access the cash injection and be repaid having claimed compensation for sick pay. It is vital that government services are swift. Overall, though, SMEs needed a turbo-charged response to the crisis, and it looks like they’ve got it.”
Suspending Business Rates for small businesses
Business rates are being abolished for some small businesses, this applies especially to small businesses in the leisure, hospitality and retail sectors. This abolishing of business rates will apply to premises with a value of £51,000. This was put in place to help small businesses as a response to Coronavirus having a detrimental effect on the economy as well as a decline in the consumer demand
The Coronavirus Business Interruption Loan Scheme
The scheme will allow small businesses to borrow up to £1.2 million from banks in order to effectively get through the negative impact the virus is having on them.
The government will cover Statutory Sick Pay (SSP) for SMEs
The government has agreed to cover the SSP for businesses with under 250 employees. The SSP will be available to those who are told to ‘self-isolate’ or those who have chosen to ‘self-isolate’. This will come at a cost of £2 billion to the government. However, this is vital in order for small businesses to be able to deal with Coronavirus without having irreversible damage done.
Reactions to the Budget 2020
In a response to the Budget, the National Chairman of the Federation of Small Businesses (FSB), Mike Cherry, said: “Covering the cost of Statutory Sick Pay and 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. The Bank of England funding package means that there are no excuses for banks not to help when a small business customer is in distress.
He added: “Suspending business rates for small high street firms is a huge bonus for our town centres and high streets. Together with extra cash for those that already qualify for small business relief, this shows a real commitment to supporting small businesses at the heart of communities. The case for fundamental reform to bring down the burden of such a regressive tax on bricks-and-mortar businesses is now stronger than it has ever been, and FSB is ready to help the Government deliver this.
Cut back on Entrepreneurs Relief
Although the budget was mostly small business-friendly, the Chancellor also announced that the Entrepreneurs Relief will be cut by 90%. Mike Cherry commented on this, stating it a ‘sensible compromise’. And many were simply pleased that it had not been completely cut, as previously predicted ahead of the Budget.
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