Posted: Wed 25th Nov 2020
Chancellor Rishi Sunak has announced his Spending Review for 2020. While there was little mention of small businesses in the speech itself, the full document released after the announcement in Parliament has details of interest to entrepreneurs. Here's a summary.
The government will freeze the business rates multiplier in 2021-22, which it says will save businesses in England £575m over the next five years.
The Spending Review document also says the government is "considering options for further COVID-19 related support through business rates reliefs". Plans for 2021-22 reliefs will be announced in the New Year.
The government has previously launched "a fundamental review" of the business rates system. The Spending Review confirms that a final report setting out the full conclusions of the review will be published in spring 2021.
The British Business Bank, which runs various finance schemes for small businesses, has been allocated £422m in 2021-22.
The Start Up Loans scheme, run by the British Business Bank, will receive an additional £56.5m in 2021-22 to provide 1,000 loans to new entrepreneurs. The document says 21% of the loans under this programme have been issued to ethnic minority entrepreneurs, who make up 4% of the overall small and medium-sized enterprise population.
The British Business Bank will also receive £50.7m for business support programmes to improve productivity through leadership, management and technology adoption.
The Spending Review confirms £519m of funding in 2021-22 to support the COVID-19 business loans schemes including paying for the 12-month interest free period for the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme.
At least £490m will be provided in 2021-22 for Innovate UK's programmes that support new technologies and businesses.
From August 2021, large employers who pay the Apprenticeship Levy can transfer unspent levy funds in bulk to small and medium-sized enterprises with a new pledge function. The government will also introduce a new online service to match levy payers with SMEs.
Funding of £146m to extend the rollout and operation of Making Tax Digital for VAT for businesses below the VAT threshold and for Income Tax Self-Assessment businesses and landlords with income over £10,000.
Emma Jones, founder of Enterprise Nation, said: "The chancellor has quite rightly used the Spending Review to broadly address the economic and fiscal context created by the pandemic and building the levelling up agenda.
"While it's good to see Start Up Loans extended to meet the increase in demand from people starting businesses, there was no mention of Brexit support for small firms or spending to facilitate access to advice.
"Small businesses have stepped up to the plate during this crisis. They have increased their digital fire power and become more resilient. We've seen a significant uptick in appetite for advice and we felt this could have been a unique moment to bed in digital adoption and an advice culture with fiscal support. We will continue to encourage the Government to consider adding this to their agenda."