Following Rishi Sunak’s inaugural budget as Chancellor of the Exchequer yesterday, the Conservative government have shown unprecedented support for SMEs that in the current climate has been gratefully received.
Jean- Philippe Pare, Head of Group Marketing at Close Brothers responded to the Budget saying:
“The unprecedented support announced for SMEs by the Chancellor in his inaugural budget today is hugely welcome. The move to extend statutory sick pay- for those businesses with fewer than 250- employees, along with the announcement of a new loan scheme indicates a swift and empathetic economic response to the real threat of coronavirus for SMEs. By going above and beyond with such funding initiatives, the chancellor is indicating how he intends to help small business in the UK thrive”.
Close Brothers Group highlights the most significant government pledges for small businesses and what this could mean for the UK’s business future.
Government to cover statutory sick pay for SMEs & The Coronavirus Business Interruption Loan Scheme
In the short term and with Coronavirus presenting a real threat to small businesses the government has committed to refund all small businesses, with less than 250 employees, that have to pay statutory sick pay to employees who are having to self-isolate. Another measure in the wake of the Coronavirus is for the government to support banks and enable them to offer ‘generous loans’ that cover up to 80% of losses with no fees.
Scrapping of business rates for smaller firms
Possibly the most significant announcement, the chancellor said yesterday that companies with a rateable value of less than £51,000 would now be eligible for a tax cut, saving each business up to £25,000. The announcement sees museums, art galleries, theatres, caravan parks, gyms, small hotels, sports clubs and night clubs benefit from the tax cut. In the longer term, the chancellor committed to a full review of the business rates systems.
£130m of new funding to extend start-up loans
10,000 UK entrepreneurs looking to set up their own business will benefit from £130m in new funding in 2021 and 2022. This is in addition to a further £200m of fresh funds have been made available via the British Business Bank which aims to increase the growth opportunities for businesses nationwide.
Changes to entrepreneur’s relief
While the government didn’t go as far as abolishing entrepreneur’s relief, Rishi Sunak has committed to a full overhaul of entrepreneur’s relief as businesses know it and admitted that the current system was ‘expensive and ineffective’. The government has reduced the lifetime limit on claims from the relief from £10m to £1m and will use the money saved; some £6bn, to cut other business taxes.