Rishi Sunak said he expected Coronavirus to have a ‘significant’ but ‘temporary’ impact on the UK economy. “People will return to work. Supply chains will return to normal,” he said. However, this sense of welcomed optimism comes with a price tag. £30bn in government spending and investment, to be more precise.
Laura Kuenssberg, the BBC’s political editor, has referred to the chancellor’s statement as “bold” and “audacious”, and indeed the budget plan introduced quite a few significant measures. Along with the Bank of England move to cut interest rates, the whole package aims to alleviate the growing financial challenges businesses could face this financial year. Yet, there is a mixed bag of reactions for the latest statement, as it holds great disappointment for the contracting industry. Despite considerable criticism, the government has decided to press ahead with the off-payroll regulations for the private sector, which will come into force this April. To get you up to date, here are the headlines from the latest budget statement followed by the main reactions in the UK business industry.
Extended Support for Small Businesses
Extraordinary measures represent £7bn to support the self-employed, businesses and vulnerable people.
3K Small Business Government Grant
£3,000 cash grant per business for any firm that is currently eligible for the small business rates relief
Coronavirus Loan Scheme for SMEs
Coronavirus loan scheme for small businesses to cover the cost of salaries and bills
Statutory Sick Pay Funding for Employers
Employers to pay statutory sick pay from day one, rather than day four – businesses with fewer than 250 employees will receive Government funding of statutory sick pay.
National Insurance Tax Break for Veterans Employers
To support the employment of veterans, the government is meeting the commitment to introduce a National Insurance tax break for employers of veterans in their first year of civilian employment.
IR35 and the Off-Payroll Tax Reform
Reforms to the off-payroll working rules in the private and third sectors will be legislated in the Finance Bill 2020 and implemented on 6 April 2020, as previously announced. Chancellor Rishi Sunak confirmed that the plans for IR35 reforms would go ahead. There are just under 4 weeks for contractors, agencies and end hirers to prepare, find out how we can help with our IR35 specialist assessment service.
Entrepreneurs’ Relief will Not Be Scrapped
Entrepreneurs’ relief to be retained, but lifetime allowance will be reduced from £10m to £1m.
Business rates retail discount for properties with a rateable value below £51,000 will get 100% relief
Flat Rate VAT
Increase the maximum Flat Rate VAT income tax deduction available to employees to cover additional household expenses from £4 per week to £6 per week, where they work at home under homeworking arrangements and from April 2020.
Will be held at 19%, the change to 17% will be cancelled.
Digital Service Tax
The government will introduce a new 2% Digital services tax (DST) on the revenues certain digital businesses earn from 1 April 2020
Stamp Duty Land Tax
The government will introduce a 2% Stamp Duty Land Tax surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.
“The core budget he wanted to deliver has been blown out of the water by the coronavirus budget... for small businesses, the future can wait"— BBC Politics (@BBCPolitics) March 11, 2020
BBC business editor Simon Jack on a “cash, cash, cash” focus from the chancellor for businesses https://t.co/uT6rNyGXou #Budget2020 pic.twitter.com/6yIrVVmHVB
Our Chief Economist @RainNewtonSmith on @BBCNews discussing today's budget.— CBI (@CBItweets) March 11, 2020
It's a difficult time for everyone but business is calm and preparing for the weeks ahead. It's reassuring to see @bankofengland & @RishiSunak working to support our economy. pic.twitter.com/wj7oaQddln
No mention of IR35 reforms in Budget 2020 provokes outrage from FCSA - Read FCSA Chief Executive, @JuliaKermode response to Chancellor Rishi Sunak’s Budget 2020 announcement: https://t.co/I5806kvGCm #budget2020 #ir35 #offpayroll #entrepreneursrelief pic.twitter.com/WICTiGaoL0— FCSA (@FCSA_org) March 11, 2020
National Insurance Threshold Increased for Employees and Employers
Primary National Insurance threshold for employees to be increased from £8,632 to £9,500 and secondary threshold for employers will be increased to £8,788.
Infrastructure Spend on Roads, Rail and Broadband
More than £600bn to spent on roads, rail, broadband and housing by the middle of 2025 with £2.5bn made available to fix potholes and resurface roads.
Red Diesel tax relief scrapped
Flood Defences Fund
£200m Flood defence fund to be shared between flood-hit areas.
Financial support for the roll-out of new car charging hubs.
Alcohol, Fuel and Plastic Tax