Incentives for small businesses: Budget 2020

March 20, 2020by Admin

Despite of Brexit uncertainties and the COVID-19 outbreak the new Chancellor, Rishi Sunak, delivered his first Budget on 11 March.

Some businesses may experience increased costs or disruptions to their cash flow as a result of COVID-19. The Budget announces a set of measures to provide support to small businesses during this temporary period. These measures will help small business either reducing their costs or bridging cash flow problems arising from the outbreak, and to protect people’s jobs.


National Insurance

The tax threshold for National Insurance Contributions will rise to £9,500 from April 2020 (was £8,632). This should save £100 a year in National Insurance contributions for 31 million people. It will maintain the personal Income Tax allowance for 2020-21 at £12,500 (2019-20 £12,500).


Government to cover statutory sick pay for SMEs

Statutory sick pay will be available to all those advised to self-isolate from the virus. The government will refund the cost of statutory sick pay for up to 14 days to small- and medium-sized businesses for £2bn. This will apply to businesses with fewer than 250 employees.

SSP will be temporarily payable from day 1 instead of day 4 for affected individuals and those self-isolating. Those who cannot claim SSP, the freelancer, for example, will have easier access to Universal Credits and the Contributory Employment and Support Allowance.


Coronavirus Business Interruption Loan Scheme

A “Coronavirus Business Interruption Loan Scheme” will support up to a further £1bn lending to smaller businesses. The government will guarantee bank loans to small businesses on amounts of up to £1.2m. The government will cover bank losses of up to 80pc.

Business rates to be scrapped for certain businesses

Government will abolish business rates altogether for smaller firms in retail, leisure and hospitality – a tax cut worth up to £1bn. The scrappage will only apply to premises with a rateable value of up to £51,000 to help cushion the blow from decreased demand until end-2020.

Other small businesses to receive a cash grant

700,000 businesses who pay little or no business rates because of small business rate relief, a grant of £3,000 will be available.

Entrepreneurs’ Relief to be scaled back

One of the significant announcements in the budget speech was the reduction of the lifetime allowance for this relief from £10m to £1m. This will apply to all relevant business disposals on or after 11 March 2020. Special provisions may apply to disposals contracted for sale before 11 March 2020, but when the sale was not completed at that date. Business owners and their advisors will need to consider other options to reduce CGT on business sales over this £1m limit.


Businesses given HMRC tax payment extension

The Government’s Time to Pay service will be scaled up, allowing businesses and the self-employed to defer tax payments. If you are concerned about meeting tax payments call the dedicated help-line 0800 0159 559.



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CGT annual allowance

The government will increase the annual tax-free allowance to £12,300 for 2020-21 (£12,000 2019-20). The equivalent allowance for trustees is £6,150 (£6,000 2019-20).



Earlier payments of CGT

From April 2020, UK residents will have to make a payment on account for CGT due on a chargeable residential property sale. They will have to make a formal computation of any gains and payment of CGT within 30 days of property disposal.


Business rates pubs discount:

The government will increase business rates discount to £5,000 to support pubs with a rateable value below £100,000 in England. The government had previously committed to introducing a £1,000 business rates discount for such pubs for one year from 1 April 2020.


See also


Business rates local newspaper office space discount:

Government will extend the £1,500 business rates discount for local newspapers in England until 31 March 2025.


Business rates public lavatories relief:

100% business rates relief will apply to standalone public lavatories in England from April 2020.


Compensation for local authorities:

Local authorities will receive compensation for the loss of income as a result of these business rates measures.


Visit also for details about current tax affairs.


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