In this highly anticipated Budget announcement, there was a real focus on support for businesses and individuals whilst the lockdown is still in place and plans to help the economy recover once restrictions are lifted. The Chancellor opened by stating that he wants to be honest about the government’s plans for fixing the public finances and set out plans for the future. Making it clear that he would do…
“whatever it takes” during the pandemic, and that he has done and will continue to do so, he added that “It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation,”
The topics covered in the Budget were quite extensive so we have put together this easy guide which highlights the changes which will affect most businesses and individuals.
First up is the support available for businesses and employees via the CJRS (Coronavirus Job Retention Scheme).
The chancellor confirmed that the furlough scheme which pays 80% of employees’ wages will be extended until the end of September as expected.
Employees will continue to receive 80% of their wages until the scheme ends whilst employers will be asked to contribute 10% in July and 20% in August and September.
The Universal Credit top-up of £20-per-week will also continue for a further six months. A one-off payment of £500 to eligible Working Tax Credit claimants across the UK is also available.
Support is also available for the self-employed.
The SEISS or Self Employment Income Support scheme has been extended until September 2021. A further 600,000 self-employed people will be eligible for help as people who filed a tax return in 2019-20 are now able to claim for the first time.
The fourth SEISS grant will cover February to April and will be worth 80% of average trading profits up to £7,500.
Further help for businesses that were forced to close due to lockdown restrictions is also available via the new ‘restart grants’.
Rishi Sunak confirmed the £5bn restart grant for businesses to help companies get going after lockdown. The restart grant is a one-off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
The new Restart Grant’ will begin in April and has been created to help businesses that have had to close due to lockdown restrictions. This grant is designed to help them open back up and restart their business.
Worth up to £18,000 for the largest businesses the grant will help shops, pubs, hotels and any other small business until June the 21st (the current estimated date that will see all lockdown restrictions lifted in England).
Approximately 700,000 small business owners including those running gyms and hair salons, shops, pubs, clubs and restaurants will benefit from the scheme.
Non-essential retail businesses that are expected to re-open on the 12th of April will get up to £6,000 per premises through the scheme to help them reopen.
Businesses in hospitality, accommodation, leisure, personal care and gyms which are due to open later, can receive up to £18,000, depending on their rateable value.
Government guidelines stipulate that in order to be eligible businesses must:
- Be based in England
- Occupy property on which it pays business rates (and is the ratepayer)
- Been required to close because of the national lockdown from 5 January 2021 onwards or between 5th November and 2nd December 2020
- Have been unable to provide its usual in-person customer service from its premises
You can apply for the restart grant scheme by visiting your local council’s website. You can find the website for your local council here.
There is more good news for business owners that occupy business premises in the hospitality or non-essential retail sectors.
The 100% business rates holiday for hospitality businesses including restaurants and pubs, gyms and other non-essential retail premises in England will continue from April until June. This will be followed by a further six-month period where rates will be discounted to two-thirds of the normal charge, up to a maximum of £2m for closed businesses.
For those not able to benefit from these grants but still requiring financial support new financing options have been announced.
Bounce Back Loans
Many businesses benefited from the original Government-backed bounce back loans which have now come to an end. A new loan scheme has now been announced to support any businesses which are still requiring financial help.
Recovery Loan Scheme
As the government-backed bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS) come to an end, the Treasury is launching a new loan scheme to run until the end of the year.
The new UK-wide Recovery Loan Scheme will make loans between £25,001 and £10 million available to help businesses of all sizes through the next stage of recovery. Asset and invoice finance between £1,000 and £10 million will also be available.
- Hospitality and leisure businesses pay no business rates for three months, then rates will be discounted for the remaining nine months of the year by two-thirds, in a £6bn tax cut.
- 5% reduced rate of VAT will be extended until the end of September. Then it will be gradually increased to 5% for six months, before returning to the standard rate from April 2022. Sunak says this is a cut worth £5bn.
There will be no changes to rates of VAT and the reduced rate for some businesses will be extended.
Reduced VAT For Tourism And Hospitality
The 5% reduced rate of VAT for tourism and hospitality will be extended for six months to the end of September. This reduced rate for hospitality, accommodation and attractions across will be in force until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.
Property owners will also be pleased to hear that the stamp duty holiday will be extended.
The stamp duty holiday will continue until the end of June on properties up to a value of £500,000. It will then be kept at double its standard level until the end of September, and then return to usual levels from the 1st of October.
The state of the UK economy as a result of the COVID19 pandemic and the resulting lockdown was a focal point of this year’s Budget announcement.
Recovery will be ‘swifter and more sustained’ than thought, Rishi Sunak says – economy forecast to return to pre-Covid levels by the middle of 2022 with the economy recovering more quickly from the pandemic than previously thought.
However, the chancellor added that in five years’ time the economy will still be 3% smaller than it otherwise would have been without Covid.
GDP will grow by 4% this year, according to official forecasts made by the Office For Budget Responsibility (OBR) and will grow by 7.3% next year.
As part of the Chancellor’s plans to boost the economy after Covid, Corporation tax will increase to 25% from April 2023 but income tax thresholds will freeze. The Chancellor was keen to note that this will be the lowest rate in the G7 and that businesses will only be impacted if they are making profits. The change will only come into effect in 2 years’ time once the OBR forecasts the economy will be recovering.
The Corporation tax rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate. This means that only 10% of companies will pay the full higher rate.
In addition, Corporation tax will remain at 19% for companies making small profits under 50K, only businesses with profits of over £250,000 will be taxed at a rate of 25%.
Jobs & Unemployment
Unemployment is expected to peak at 6.5% in 2022 which is lower than the 11.9% which was predicted. This means that 1.8 million fewer people are expected to be out of work than previously thought.
In another move to boost the economy and reduce unemployment rates, there is an extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
Additionally, £7 million has been allocated to a new “Flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
Training is to get an injection of £126 million for 40,000 more traineeships in England, funding high-quality work placements and training for 16-24-year-olds in the 2021/22 academic year.
There will be no changes to rates of income tax, national insurance or VAT.
- Personal income tax allowance will be frozen at £12,570 from 2022 to 2026
- Higher rate income tax threshold will be frozen at £50,270 from 2022 to 2026
Can We Help?
We hope that you have found this Budget guide helpful and some of the announcements will help you and your business.
If you would like to discuss any of the announcements in the Budget with one of our friendly staff then don’t hesitate to get in touch.
You can contact us on 01704 211 434 or firstname.lastname@example.org
If you are struggling to keep up to date with the various policies, grants and schemes which affect your business we are here to help. Our Coronavirus Business Support page contains up to date information for businesses, sole-traders and employees.