The new Chancellor opened his speech addressing the immediate health, economic and social concerns associated with the COVID-19 outbreak. Emphasising his opinion that the Coronavirus crisis will be ‘temporary’, the Chancellor confirmed that the following are amongst those immediate actions that will be executed:
Support for Individuals
Eligibility for Statutory Sick Pay (SSP) – The forthcoming COVID-19 Bill will temporarily allow SSP to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or must self-isolate. The government will temporarily extend SSP to cover:
Individuals who are unable to work because they have been advised to self-isolate.
People caring for those within the same household who display COVID-19 symptoms and have been told to self-isolate.
Medical evidence for SSP – Guidance has been issued to employers, advising them to use their discretion not to require a GP fit note for COVID-19 related absences. A temporary alternative to the fit note is to be introduced in the coming weeks and will be able to be used as evidence for absence from work for the duration of the COVID-19 outbreak.
Support for those ineligible for SSP – Those who are self-employed and employees below the Lower Earnings Limit are not entitled to SSP. Financial support will be provided via the ‘new style’ Employment and Support Allowance, which will be payable for people directly affected by COVID-19 or self-isolating according to government advice for from the first day of sickness, rather than the eighth day.
Support for Businesses
Statutory Sick Pay – Small and medium-sized businesses and employers will be able to obtain a refund of payments of COVID-19 related SSP. The eligibility criteria for the scheme are as follows:
This refund will be limited to two weeks per employee.
Employers with fewer than 250 employees as of 28th February 2020.
Employers should maintain records of staff absences but should not require employees to provide a GP fit note.
The eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force (TBA).
A repayment mechanism for employers is to be established as soon as possible.
Other SME COVID-19 supportive measures are:
Business rates in England will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000.
Time to Pay – Businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Her Majesty’s Revenue and Customs (HMRC) has set up a dedicated COVID-19 helpline to help those in need, and they may be able to agree a bespoke Time to Pay arrangement.
Coronavirus Business Interruption Loan Scheme – A new, temporary Coronavirus Business Interruption Loan Scheme is to be launched, 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 per cent 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 £1.2m in value. This new guarantee will initially support up to £1bn of lending, on top of current support offered through the British Business Bank.
COVID-19 measures notwithstanding the 2020 Budget was a lesson in BIG spending, some of which is to include:
Immediately investing £5bn in the NHS to support the service through the virus outbreak.
Further funding increase of £34bn annually by 2024 for NHS England.
English Strategic Roads will see a spend of £27bn between 2020 and 2025, repairing and building our road network.
Shared Rural Network is to receive investment of £5bn to enable the gigabit broadband rollout in the remotest areas of the UK.
Funding of £5.2bn for flood defences between 2021 and 2027, offering better protection for 336,000 homes and non-residential properties.
Additional funding of £200m will help communities most at risk of flooding recover faster in cases where they are affected by flood damage.
£10.9bn increase in housing investment to support the commitment to build at least one million new homes by the end of Parliament, at an average of 300,000 homes a year.
After the reassurances and the spending intentions had been outlined, the Chancellor confirmed several aspects of taxation that are to be impacted by this Budget. We believe the most salient to our clients are:
The Entrepreneurs’ Relief lifetime limit has been reduced from £10m to £1m. This impacts transactions dated on or after 11th March 2020.
The 100 per cent First Year Allowance (FYA) on low emission business cars will continue until April 2021. Vehicles with nil CO2 emissions will continue to receive the FYA until 2025, whilst cars with low CO2 emissions (<50g/km) will then receive 18 per cent Writing Down Allowances (WDAs).
The Research and Development Expenditure Credit rate will increase from 12% to 13% effective 1st April 2020.
Non-UK resident companies with UK property income will be subject to Corporation Tax instead of Income Tax from 6th April 2020.
The main rate of UK Corporation Tax will remain at 19% until 2021.
As of 6th April 2020, the Capital Gains annual exemption amount has increased from £12,000 to £12,300 for individuals and personal representatives, and from £6,000 to £6,150 for Trustees of settlements.
Effective from 6th April 2020, the Employment Allowance of £3,000 per year will be increased to £4,000.
Clarification has been provided on the treatment of the Loan Charge introduced on 1st April 2019. The scenarios where HMRC can apply this charge have been narrowed, having a positive impact on those who used Disguised Remuneration schemes pre 5th April 2016.
From 6th April 2020, the flat-rate van benefit will increase to £3,490, the car fuel benefit multiplier will increase to £24,500 and the flat-rate van fuel benefit will increase to £666.
April 2022 will see the introduction of the Plastic Packaging Tax. This will apply to all plastic packaging using less than 30 per cent recycled plastics.
All new cars provided to employees and available for private use registered from 6th April 2020 will be taxed according to CO2 emissions figures under the Worldwide Harmonised Light Vehicle Test Procedure System. Rates to be maintained per 2020- 21 for both 2021-22 and 2022-23.
Fuel Duty is to be frozen for a further year.
Subsidies for Red Diesel fuel used in off-road vehicles will be scrapped for most sectors from April 2022, except in agriculture, fish farming, rail and for noncommercial heating (including domestic heating).
Further information and updates will be sent to all clients, once they become known, in the normal way through our e-newsletters. If you have any queries in the meantime, then please do not hesitate to contact our office.