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Markel Tax

11 Mar 2020

Budget 2020: Tax changes for small and medium enterprises (SMEs)

As part of a £30 billion package to help combat the outbreak of COVID-19, some new specific measures were announced that will benefit many SMEs including a temporary exemption from business rates, cash grants and increases in business rate discounts for eligible businesses. 

Alongside these measures, the following changes, impacting SMEs, were included within the budget announcements:

  • The previously proposed reduction in the corporation tax rate to 17% effective from April 2020 will not go ahead. The corporation tax rate will remain at 19% for the financial years beginning 1 April 2020 and 1 April 2021. This rate will also apply to non-UK resident landlord companies with UK property income which will brought within the corporation tax regime from 6 April 2020.
  • The rate of capital allowances, Structures and Buildings Allowance will increase from 2% to 3% with effect from April 2020.
  • An increase in the Employment Allowance from £3,000 to £4,000 from 6 April 2020, providing increased relief for businesses on their employer secondary Class 1 NIC liabilities.
  • A proposed, lifting of the restriction for pre-Finance Act 2002 intangible assets from being brought within the intangible fixed asset regime for acquisitions after 1 July 2020. This will allow companies to claim relief for older intellectual property rights.
  • The benefit charge for vans and the fuel benefit charge for cars and vans will be increased but only in line with the Consumer Price Index from 6 April 2020.
  • As part of the package to combat COVID-19, the Chancellor announced a temporary measure, promising a refund to companies with fewer than 250 employees on their costs of providing statutory sick pay (SSP) for the first 14 days of an employee’s sick leave. Self-employed workers who are not eligible for SSP will be able to claim a ‘new style’ Employment Support Allowance.
For changes to entrepreneurs’ relief, read our in-depth analysis here. 

For assistance with this issue or with other owner-managed business queries, please contact Martin Mann at Markel Tax.
Next article in series

11 Mar 2020

Budget 2020: First thoughts