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Budget 2020: What it means for you and your employees.

With COVID-19 dominating the headlines this week you may be forgiven for missing the Budget given by the Government on Wednesday.  Chancellor Sunak is, and let’s be honest here, a novice Chancellor, having only been in the post a month and he unveiled the biggest giveaway for years.

I do wonder however, where he thinks the £175 billion he spent is going to come from.  Don’t get me wrong – the spending was overdue. But I am sceptical about how deep the coffers actually are.  It is likely that the Autumn Budget sees some major tax rises, so as a small business owner myself I am not going to get too excited.

Coronavirus

It was announced that Statutory Sick Pay (SSP) will be payable from day-1 for those companies that have less than 250 employees.  This only applies when they have used the 111 system and been told to self-isolate. They will provide a sick note that the employee must produce to their employer to qualify for the SSP payment.

The abolition of claiming the SSP back against your PAYE has been temporarily lifted so in essence the Government thinks small businesses won’t be affected.  They, of course, haven’t considered the loss of revenue.  Businesses that rely on employees generating revenue by meeting and servicing clients face to face are going to struggle.  Take the plumbers and electricians, they can’t complete work if they have been isolated and therefore the company’s revenue is going to take a hit.

Companies with employees that are not client facing and that can carry out work remotely will be less affected, but I don’t think they’re going to get away scot free.

National Minimum Wage

We have already published the new rates, on our PAYROLL PAGE.  This rise is the biggest to date, giving employees a 6.2% pay rise and the Chancellor indicated that there will be an increase year-on-year until the minimum wage reaches £10.50 per hour.

National Insurance threshold

It was also announced that the threshold for earnings before paying NIC will rise to £9,500 from 6 April 2020.  This means Directors in particular who utilise only paying up to this limit in their earnings will be able to pay themselves £791.66 per month, a rise of £72.66 from the current year.

Employer Allowance (EA)

This will rise to £4,000 per year but there are some restrictions.  Your 2019-20 employers NIC must be below £100,000 and you must also consider any de minimum state aid you may have received.

If you operate more than one payroll you must add together the employers Class 1 NICs liabilities for each payroll, if the amount is:

  • £100,000 or more you will not be eligible to claim EA
  • Under £100,000 you should decide which payroll makes the claim, you cannot split it across the two

If your business falls into de minimis state aid rules you will need to make sure that you have capacity under your business sector ceiling to get the full amount of EA available.

The table below shows the de minimis state aid ceilings for the relevant 3-year period.  These are set by the European Commission.

Business sector Ceiling
Primary production of agriculture products €20,000
Fisheries and aquaculture sector €30,000
Road freight transport sector €100,000
Other, industrial (everyone else) €200,000

How much tax will your employees pay?

We found this illustration in The Times and thought you would appreciate it. You can read more HERE.

If all this gives you a headache and you do your payroll yourself, why not consider outsourcing it to Seamount Payroll?  We’re happy to have a chat or a videocall to discuss how we can help.  CONTACT US here with your details and one of our experienced team will get back to you.

 

Do you want to know how we can help you?

We would be happy to discuss your requirements and put the most appropriate package together for you.

 
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