So what help has Rishi offered to the UK’s hard working businesses as they continue to navigate lockdown, restrictions and uncertainty? From innovation-boosting schemes to stealth tax rises and industry-specific rates, we go through the main support and changes you need to be aware of.
We’ve already vaccinated over 20 million people, and the forecast from the Office of Budget Responsibility (OBR) is more positive than the outlook in November. Currently they’re expecting the UK economy to recover to pre-pandemic levels by the middle of next year.
With this encouraging outlook, the Chancellor tried to reassure the public in his speech by declaring: “I said I would do whatever it takes. I have done and I will continue to do so.” He made the three parts of his plan clear:
Protecting, creating and supporting jobs is a key focus of this Budget. Furlough will be extended to the end of September. Employer contributions will increase to 10% in July and 20% in August and September. Employees will still get 80% of their salary throughout.
The living wage will also increase to £8.91 per hour from April.
There will be a fourth grant available for the self-employed which will cover 80% of profits from February to April 2021. A fifth grant will be available in July and will be tailored to support those most affected. Anyone whose turnover has fallen by more than 30% will be entitled to more to recognise the uneven effects of coronavirus on different businesses and sectors.
The self-employment income support scheme (SEISS) will now cover those who started working for themselves in the financial year 2019-20. That means over 600,000 self-employed people who’ve been excluded from the government’s support packages will now be able to receive direct cash grants.
If your business is in the retail, hospitality or leisure industry then the current business rates holiday will continue until the end of June. After that, there will be a two-thirds discount until the end of the year for those businesses most affected by the pandemic. This will include a lower cap for those less affected and able to open.
The June 2020 VAT cut for tourism and hospitality is continuing for 6 months until September. After the extension is over the rate will rise from 5% to 12.5% for businesses in those industries.
There will be no VAT increases, and National Insurance and income tax contributions will also be the same.
From April, £5 billion worth of grants will be made available to the hardest hit businesses in the UK. Non-essential retail can open from 12 April at the earliest and will be eligible to claim up to £6,000. For hospitality and leisure businesses that cannot open until May or June they can apply for up to £18,000 to help them reopen and rebound strongly.
The Chancellor announced the £520 million Help to Grow scheme, which will offer 130,000 businesses access to heavily discounted management and digital training programmes run by business schools. This expertise is being made available to help businesses improve and grow. They’ll also be entitled to 50% off software valued at up to £5,000 to support business.
The scheme will open in June and you can find out more and register here.
To replace CBILS and the Bounce Back Loans Scheme, the Treasury is introducing a new Recovery Loan Scheme to support businesses through their reopening. They will be open to any businesses and applications can be made from between £25,000 and £10 million. The big difference between this and the current schemes is that the Government will only guarantee 80% to lenders, no the full amount.
If you’d like to make the most of the 100% government-backed CBILS facilities we offer, then make sure to start your application before the 31 March deadline.
A new Treasury campus will be set up in Darlington and Leeds will be home to a new national infrastructure bank. The latter will be used to hand out £13 billion of equity and debt capital. It will also have £10 billion of guarantees and will be able to offer loans to local authorities.
Sunak announced eight locations of new freeports to make it easier and cheaper to do business. This will also create jobs. The regions selected are: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
There will be more money available in the Future Fund and apprenticeships to help more young people into viable jobs. The Government will also issue more talent visas to encourage investment and commerce to our shores from overseas.
Sunak included a £25 billion “super deduction” tax break for companies to claim 130% back on their investment from their taxable income. It would be the equivalent of 25p per £1 and is designed to encourage innovation and investment in British business.
No government has borrowed so much since the Second World War and it will take generations to balance public debt. However, there has been a record amount of fiscal support (£407 billion) for businesses and livelihoods which is set to continue as we make our way out of lockdowns and restrictions.
We expect to hear more on capital gains tax and digitising the tax system soon. However, the Chancellor ended his speech on a positive note, creating a thriving UK business environment and economy to support “people ambitious for their future”.
Rishi Sunak delivered his second Budget as Chancellor of the Exchequer. Although a lot of the schemes and extensions had already been leaked, there were a few details that were new to those tuning in.