New Chancellor, Rishi Sunak, has delivered his first budget in the House of Commons, just a month after taking up his new position.
Mr Sunak used his statement to announce a £30bn package of measures to support businesses during the coronavirus outbreak. He said the government would do everything it could to keep Britain ‘healthy and secure’ and lay the foundations for the economy to prosper in the months and years ahead.
Among funding announcements for healthcare, education and housing, there’s also been a lot of news for businesses, including start-ups. Here’s all you need to know about the Budget 2020.
While the full impact of the virus will remain unknown for weeks, if not months, it is estimated that up to a fifth of the workforce could be off work at times during the outbreak. Consumer spending is likely to fall for a period, too. Recognising this, the government is to refund any small and medium-sized businesses who provide statutory sick pay to anyone for up to 14 days. Statutory sick pay now also covers people who have been advised to self-isolate, as well as those who have officially contracted the virus. Sick notes will now be available from the 111 helpline, as well as from doctors, during this time.
The Chancellor said the government would offer a ‘bridge’ for businesses, so a temporary impact doesn’t become permanent. The government will launch a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses in accessing bank lending and overdrafts - distributing loans of up to £1.2m each.
Business rates for firms in England with a rateable value below £51,000 have been suspended for a year, the Small Business Rate Relief has been extended and a £500m hardship fund will be given to local authorities to help people in need.
There’ll also be support for self-employed people who may have issues with upcoming tax payments. HMRC has set up a dedicated Covid-19 helpline to help anyone in need, with the possibility of people being able to defer tax payments if necessary.
The Chancellor said he wanted to ‘unleash the power of business’ in the country. The British Business Bank’s Start Up Loans programme will be extended to the end of 2021-22, with £130m to support up to 10,000 further entrepreneurs across the UK to access finance to start a business.
There were also announcements for £900m investment in high-potential technologies, a further £200m in life sciences and another £200m in venture capital investments. The government says the investment represents a ‘step change’ in its approach to research and development. There will also be dedicated, regional trade envoys to promote UK businesses to overseas economies.
The government has formally announced a new, ambitious target for the National Living Wage to reach two-thirds of median earnings and be extended to workers aged 21 and over by 2024 - provided economic conditions allow. Based on the latest forecasts, this means the Living Wage is expected to be over £10.50 in 2024.
The government will help small businesses take on extra staff to fulfil their potential and boost employment by delivering on its commitment to increase the Employment Allowance to £4,000. As a result, businesses will be able to employ four full-time employees on the National Living Wage without paying any employer National Insurance contributions. The National Insurance contributions threshold will rise to £9,500 from April 2020, too.
The Chancellor was widely tipped to scrap this tax scheme, which is designed to incentivise people to grow a business by reducing Capital Gains Tax after people sell companies. However, Mr Sunak followed the advice of the Federation of Small Businesses, with the lifetime limit being reduced from £10m to £1m instead.
There will be record funding of £5.2bn for flood defences between 2021 and 2027, offering better protection from flooding for 336,000 homes and businesses. An additional funding pot of £200m will also be available to help communities most at risk to recover faster from instances of flooding.
The government will introduce a new Plastic Packaging Tax from April 2022 to incentivise the use of recycled plastic in packaging.
The government has committed £5bn to support the rollout of gigabit-capable broadband in the most difficult to reach 20% of the country, and up to £510m to support improvements in mobile coverage.
Official figures provided by the Office for Budget Responsibility show that the economy was predicted to grow by 1.1% this year, before taking into account the impact of the coronavirus. This is set to rise to 1.8% in 2021/22, 1.5% in 2022/23 and 1.3% in 2023/25. Inflation is forecast to be 1.4% this year, and 1.8% next year.
As expected, duties for beer, cider, wine and fuel have all been frozen again. And the government has allocated £10m for research and development spending to help decarbonise UK distilleries, including the whisky sector. There is also set to be a £1m campaign to promote Scottish whisky.
Earlier in the day, the Bank of England announced an emergency cut in interest rates to help shore up the economy amid the coronavirus outbreak.
Interest rates have been cut from 0.75% to 0.25% - back down to the lowest rate in history. The Bank said it would also free up billions of pounds of extra lending power to help banks support businesses. Corporation Tax remains at 19% - the lowest in the G20.
For more detail on these announcements, read the full government statement.