The first Budget of the decade revealed support for UK businesses feeling the strain of the coronavirus.
Rishi Sunak’s first budget was dominated by the coronavirus, currently the biggest threat to the wellbeing of the UK economy.
As a result of the deadly virus, many SMEs are being left in the lurch as more staff have to self-isolate and consumers are increasingly unwilling to risk infection and spend.
The Chancellor announced the creation of a fintech review and delivery panel which it’s hoped will “identify what more industry and government can do to support growth and competitiveness” for the UK fintech industry.
Aside from the creation of the new fintech panel, the Chancellor also announced other policies that could impact fintech in the UK.
Earlier in the week, the Government announced that, as a result of the ongoing coronavirus crisis, statutory sick pay would come into effect on the first day of an employee’s sick leave, not the fourth as it once was.
It was also revealed that the Government would reimburse up to 14 days of sick pay per employee.
This brought a welcome sigh of relief to many SMEs who are bracing for the downturn in economic trajectory the UK is currently facing.
Oliver Prill, CEO of Tide, said: "As a business dedicated to supporting micro, small and medium-sized businesses, we are very pleased to see the UK government announce measures to ease the pain of the outbreak of the Coronavirus for UK SMEs.”
As predicted in AltFi’s Budget 2020 preview, the new Chancellor delivered a blow to the UK’s entrepreneurs by cutting back the tax relief that entrepreneurs currently receive when they sell their businesses.
Under the current system, those selling their companies only pay ten per cent on lifetime gains up to £10m, half the current rate of 20 per cent capital gains tax for everyone else.
Sunak has announced that he will reduce the lifetime limit on gains eligible for relief to £1m.
According to the Budget, the tax break has “done little to incentivise entrepreneurial activity and that most of the benefit accrues to a small number of very affluent taxpayers.”
It also noted that despite the reforms, “80 per cent of those using the relief unaffected.”
Tide’s Oliver Prill said he was “disappointed” to see the tax relief reduced, but said he understood the need for reform.
As mentioned earlier, very few entrepreneurs actually benefitted from the entrepreneur tax break as most of them were selling businesses above the threshold meaning the vast majority will remain unaffected.
The current focus of the Government is to prevent the country’s smaller businesses from folding as a result of the coronavirus pandemic, and by doing so it has provided economic stimuli, in the form of safety nets, to prevent it.
Anand Sambasivan, CEO of investment platform PrimaryBid said: "The UK government's proactive support for the country's booming fintech sector will ensure that we remain a global fintech hub.”
The safety nets offered in today’s budget will not only help SMEs through the coronavirus-storm but could also help secure their businesses in the long term too.
21 March 2023
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