CHANCELLOR Rishi Sunak has won praise for his first Budget from leaders of small businesses after he moved to ease fears the coronavirus could take a devastating toll on the sector.

The Budget was unveiled amid growing concern the spread of the virus could leave firms facing potentially crippling cash flow shortages as customers stayed away and staff had to take time off.

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However, Andrew McRae, Scotland policy chair at the Federation of Small Businesses (FSB) said the Government and Bank of England had pulled out the stops to try to ensure good businesses did not go the wall.

The Bank of England slashed the official base rate to a record low of 0.25 per cent yesterday morning.

Mr Sunak said firms with less than 250 employees will be able to reclaim the cost of Statutory Sick Pay in respect of employees affected by coronavirus for the first 14 days.

Self-employed people will be able to claim Employment and Support Allowance after eight days rather than one.

Firms will be eligible for Business Interruption loans from banks worth up to £1.2 million, with the Government guaranteeing up to 80 per cent of their borrowings.

They will also be able to defer tax payments under an extended Time to Pay programme, with 2,000 staff to be drafted in to operate help lines.

“By picking up the tab for the first 14 days of statutory sick pay, the UK Government is providing essential support for small employers,” said Mr McRae.

He added: “New flexibility from HMRC should give many local enterprises much needed room to manoeuvre.”

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Scottish Chambers of Commerce said measures such as the business interruption loan scheme were very welcome given the threat coronavirus poses to growth in Scotland.

Mark Houston, head of Johnston Carmichael chartered accountants’ Glasgow office, said the measures would provide immediate, valuable help for small businesses.

“Cash flow is the thing that everybody is talking about at the moment,” he said.

However, Mr Houston noted that a large element of the coronavirus support package for small firms will be delivered through the business rates system in England and Wales. This will include £3,000 grants for qualifying businesses.

The Scottish Government has control over business rates in Scotland and it remains to be seen if it will follow a similar approach to the one taken by Mr Sunak.

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The FSB said decision-makers must ensure that local businesses in Scotland don’t lose out.

It was pleased that the Chancellor appeared to heed calls for firms to be given more help to create jobs. Mr Sunak increased the annual Employment Allowance to £4,000 from £3,000.

The federation’s director of devolved administrations, Colin Borland, said Employment Allowance contributed to the viability of small employers and helped them afford higher wages and additional staff.

“It has never been more needed than it is now,” he said. “That’s why, ahead of the Budget, we called for it to be increased from £3,000 to at least £4,000.”

The federation was pleased Mr Sunak delivered on a promise to introduce a one-year national insurance holiday for small employers that take on a member of staff from the ex-forces community.

It welcomed the fact the Chancellor maintained the freeze on fuel duty and decided to curb Entrepreneur’s Relief rather than scrap it.

The lifetime limit for gains that will be taxed at the discounted 10% rate has been cut to £1m from £10m. Mr Borland said this should mean the relief is targeted on the owners of small fims.

Johnston Carmichael’s Mr Houston said the fact the changes took immediate effect could pose challenges for people who had invested in firms.

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As expected, Mr Sunak left the Corporation Tax rate at 19%. He increased the tax allowance available for businesses that invest in buildings, to 3% from 2%, but left tax breaks for equipment purchases unchanged.

The Research and Development tax credit regime for small and medium sized enterprises was maintained.