On 11th March, the Conservative Government announced their first budget since winning the General Election. This budget, however, was announced under unusual circumstances. The spread of Covid-19 looms large over all fiscal policies and so unusually, at least in recent years, the Conservative Government have chosen to splash the cash in the 2020 Budget. We analyse what this means for employees and employers alike.
2020 Budget - Statutory payments
What has been known for some time is that the National Living Wage and National Minimum Wage will increase. Employers should be careful to ensure that hourly rates are increased on 6th April 2020 to reflect these increases. Also remember that the apprenticeship rate only counts for the first year of the apprenticeship course. After this point, the normal age related minimum wage should be paid.
Other statutory payments also increase from 6th April 2020. For further guidance about how maternity pay works, click here. Sick pay guidance is also available here but read on for further information about specific changes to Sick Pay during the Coronavirus pandemic. You can find other helpful information in our blog section.
The increase in National Insurance will take some 500,000 employees out of the tax altogether which will save employees approximately £85 per year.
2020 Budget - Help for small businesses.
The 2020 Budget unveiled a package of benefits to help small businesses during this uncertain time. Whilst we don’t yet have all the answers, what we do know is summarised below.
Extensions to Statutory Sick Pay
Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with Government advice. This guidance means that SSP will be payable from day one even if employees don’t contract Coronavirus as long as they follow the below guidance.
• People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor. This can be used by employees where their employers require evidence. Further details will be confirmed shortly.
Temporary relaxation of lower earnings limit and support for the self employed
Those who are not eligible for SSP, for example the self-employed or people earning below the Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance:
o For the duration of the outbreak, the requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice, ensuring self-employed claimants will receive support.
o Contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25, for eligible people affected by COVID-19 or selfisolating in line with advice from Day 1 of sickness, rather than Day 8.
SSP Relief for small businesses
For the duration of the pandemic, businesses under 250 employees (as at 28 February 2020) will be able to reclaim SSP for COVID-19 related illnesses. Interestingly, there will be no evidence requirement. So even if employees do not provide a fit note but declare that they are either self isolating in line with Government guidance or have contracted Coronavirus will be eligible. Whilst this is good news for employers, there is no refund mechanism in place. So we wait to see how long it will take before these payments are made.
2020 Budget - Business rates relief
An estimated 900,000 small businesses will receive 100% business rates relief in the coming tax year. The Small Business Rate Relief (SBBR) scheme will be widened to cover the hospitality and leisure sectors. We await further guidance which should be made by 20th March.
2020 Budget - Small business grants
If you currently are eligible for SBBR or Rural Rate Relief, you may be eligible to receive a £3,000 grant to help with ongoing costs. We don’t have clarity on how to apply for this yet or what it will be calculated on so watch this space.
2020 Budget - Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British
Business Bank, will launch in a matter of weeks 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.
Budget 2020 - HMRC time to pay
If you are struggling to make good on your outstanding tax liabilities, you are encouraged to call the dedicated HMRC line on 0800 0159 559. Get ahead of the problem rather than default.
If you paid less than £100,000 in Class 1 National Insurance payments in tax year 2019/20, you may be eligible to apply for the Employment Allowance. This allows businesses to reclaim up to £3,000 of Employer’s NI. Click here for more information.
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