Budget backs SMEs

Chancellor Rishi Sunak’s first budget to help retailers and the economy. In his first budget, Chancellor Rishi Sunak has announced a £30 billion plan to protect and support the economy amid the coronavirus outbreak.

The Government says public safety is the top priority and is taking action consistent with the best scientific evidence. However, the government recognises that people will be concerned about the effect the virus may have on their livelihood, business and the economy.

To offset and manage these issues surrounding the coronavirus, the government has set out a number of initiatives. “We will protect our country and our people. We will rise to this challenge,” said the chancellor. UK employees to get statutory sick pay from the first day off work to contain coronavirus. SSP will be temporarily extended to those who can’t work due to being self-isolated, as well as those caring for others in the same household who display symptoms and have been told to self-isolate. This is paid by the employer but businesses with fewer than 250 employees can reclaim this cost for the 14 days of isolation.

For those who aren’t eligible for sick pay, such as the self-employed, they will be able to claim Employment and Support Allowance (ESA) from the first day of illness rather than the fourth day. As previously announced, the Business Rates retail discount will be increased to 50% in 2020-21 but to further support small businesses an exceptional business rates holiday for retail, leisure or hospitality firms with a rateable value of under £51,000. These measures mean around 900,000 properties, or 45% of all properties in England will receive 100% business rates relief this financial year. A fundamental review of business rates was announced in the budget, with the report due in the autumn.

The Government will also provide £2.2 billion of funding for local authorities in England, which means a £3000 grant to businesses eligible for small business rates relief. These actions follow the Bank of England’s emergency move to cut interest rates earlier on Wednesday the week before. The bank cut its base rate from 0.75% to 0.25%.

The Government will launch a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The Government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.

Also announced was a plastics packaging tax will be levied on manufacturers and importers from April 2022 to incentivise the use of recycled plastic in packaging. Housing, Flood prevention, roads, infra-structure, research and development all also benefited from funding in today’s budget which will in turn aid communities across the country.