Coronavirus: Government abolishes business rates for thousands of shops, restaurants and music venues

Chancellor Rishi Sunak announces £30bn stimulus package to deal with economic impact of virus outbreak

The Government has temporarily abolished business rates for thousands of small firms as part of emergency measures to deal with the economic fallout from the coronavirus.

Chancellor Rishi Sunak announced a £30bn stimulus package that includes £12bn specifically targeted at mitigating the virus' impact.

Retail, leisure and hospitality companies' with a rateable value of less than £51,000 will not pay any business rates this year. These sectors are expected to be among the worst affected as people cut back on travel and stay home during the coronavirus outbreak.

Firms in England will not have to pay any business rates on nearly half of all commercial properties, the chancellor said, while a discount that pubs receive on their rates will increase from £1,000 to £5,000.

Business rates in Scotland, Wales and Northern Ireland are set by their devolved administrations. The government will also review the long-term future of business rates, a property tax which has been blamed for damaging UK high streets by burdening struggling firms with large bills.

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Delivering his first Budget speech less than a month into his new job, the chancellor announced £1bn of lending via a government-backed scheme.

The "Coronavirus Business Interruption Loan Scheme" will guarantee up to 80 per cent of banks' losses on loans provided to small businesses on amounts up to £1.2m.

Cash grants of up to £3,000 will be made available to 700,000 of the smallest firms that are exempt from business rates. Companies with less than 250 staff will also receive funding totalling up to £2bn to cover the cost of sick pay during the outbreak.

Mr Sunak announced statutory sick pay of £94.25 per week will be available for all of those advised to self isolate during the outbreak, even if they do not have symptoms. This will not extend to zero hours workers or those who are self employed.

Instead, millions of gig economy workers will be given help through a £500m boost to the benefits system, including a temporary halt to the minimum floor in universal credit and quicker payments for employment and support allowance (ESA) claimants.

Mr Sunak claimed the coronavirus response measures amounted to "one of the most comprehensive economic responses of any government anywhere in the world to date".

They will be complemented by the Bank of England's surprise announcement to slash interest rates by 0.5 per cent to an all-time low of 0.25 per cent.

Beyond its emergency measures, the government pledged to invest an extra £175bn over the next five years in a move that will boost economic output by 0.5 per cent, according to the Office for Budget Responsibility.

Included in that figure is a planned increase in spending on research and development to £22bn a year - its highest level as a proportion of GDP for almost 40 years, the chancellor said.

That would put the UK ahead of many other countries, including France and Germany, for government spending on R&D.

Mr Sunak announced £800m for "a new blues-skies funding agency" to discover new technologies, modelled on the US Advanced Research Projects Agency (Arpa).

The Budget also provides £5bn to rollout gigabit-capable broadband into the hardest to reach places and £510m of new investment for the shared rural mobile phone network.

Low-paid workers will receive a boost after Mr Sunak announced the national living wage will rise to two thirds of median earnings by 2024.

As promised in the Conservative manifesto, the minimum earnings threshold for National Insurance contributions will rise from £8,632 to £9,500, boosting people's take-home pay by £85 per year.

To help pay for what Mr Sunak described as the "biggest sustained fiscal boost in 30 years", the government scrapped a planned cut in corporation tax from 19 per cent to 17 per cent.

The UK already has one of the lowest rates of tax on corporate profits of any industrialised nation.

A tax on tech giants such as Google, Amazon and Apple will go ahead next month as planned. The digital services tax of 2 per cent on large technology companies' revenues is designed to stop the Exchequer missing out on profits shifted into tax havens. It's expected to raise £440m a year.

Arun Birla, a partner at law firm Paul Hastings warned that implementing the tax will not be easy. "Whilst Spain and Italy are following suit, implementing their own unilateral taxes, what is really needed is a multijurisdictional approach that encompasses all nations, preventing them from implementing multiple versions of what is fundamentally the same legislation," he said.

"That said, setting up a global policy is no mean feat, and will only be achieved if all countries have the desire to do so.”

Entrepreneurs relief, a tax break for business owners that costs £2bn a year, will be substantially reduced. The government will cut the total amount of relief an individual can claim over their lifetime from £10m to £1m, saving around £6bn for the public purse over this parliament.

"Less than one in ten claimants say the relief was an incentive to set up their business, and it is unfair, with three quarters of the cost going to just 5,000 individuals," Mr Sunak said.

There was bad news for the economy, however, as the OBR again cut its forecast for growth and productivity.

The chancellor forecasts the UK economy will grow 1.1 per cent this year, before taking into account any hit from coronavirus. That's down from 1.4 per cent predicted by the OBR in March last year.

The downgrade came after official figures released on Wednesday morning showed the economy did not grow at all in January, dashing Conservative hopes of a post-election bounce.

Tom Leman, head of retail and consumer at law firm Pinsent Masons, said: “The abolition of business rates for small to medium-sized retailers and restaurants will be extremely welcome news.

"On the basis the coronavirus is not a long term issue for these businesses it is crucial that they have the liquidity to see them through the worst.

"This will definitely help the cause and hopefully see many of them come out the other side ready to benefit from the increased spending power prompted by the money people are currently saving on their discretionary spend.”