Chancellor Rishi Sunak has announced a series of wide-ranging business support measures in the 2021 Budget.
Sunak addressed the House of Commons this afternoon to reveal the government’s latest £65bn injection to industry to mitigate the coronavirus pandemic impact.
Of particular interest to the UK catering equipment supply chain, the furlough scheme has been extended to the end of September, with the government paying 80% of furloughed employees’ salaries. This will be stepped down as businesses begin to reopen, with employers asked to contribute 10% from July, then 20% from August.
Furthermore, there was more support for the self-employed with the Self-Employment Income Support Scheme (SEISS) extended until the end of September. The Chancellor also announced that more than 600,000 people, many of whom became self-employed in 2019-20, may now be able to claim direct cash grants under SEISS.
A fourth round of grants will cover February to April, worth 80% of average trading profits up to £7,500. A fifth grant, worth 3 months of average profits, will be available from July. Companies whose turnover has fallen by 30% or more will continue to receive the full 80% grant, while those whose revenue has been reduced by less than 30% will receive a 30% grant.
In addition, the business rates holiday in England has been extended by an additional 3 months. That means 750,000 retail, hospitality and leisure properties in England will pay no business rates for three months from 1 April when combined with Small Business Rates Relief, with further relief available for the rest of the year.
To continue supporting the 150,000 businesses in the tourism and hospitality sectors and to protect 2.4mn jobs, the government has extended the temporary 5% reduced rate of VAT until 30 September 2021. To help businesses manage the transition back to the standard rate, a 12.5% rate will then apply for a further 6 months, until 31 March 2022.
Furthermore, all alcohol duty has been frozen for third year in a row, with the planned increases cancelled.
Grant funding will be available to companies in England through a new £5bn Restart Grant scheme – a one off cash award of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
A new Recovery Loan Scheme will also be launched to replace the existing government guaranteed schemes which have supported £73bn of lending to date and close at the end of March. This makes available loans between £25,001 and £10m, and asset and invoice finance between £1,000 and £10m, to help businesses of all sizes through the next stage of recovery.
The Chancellor is increasing business support with £126m of new money to enable 40,000 more traineeships, and doubling the cash incentive to firms who take on an apprentice to a £3,000 payment per hire. The National Living Wage will also be increased to £8.91 from April.
130,000 small and medium sized businesses will be supported through a new Help to Grow scheme, which will commence by the autumn. Small businesses will be able to access a 12 week-programme delivered by leading business schools across the UK.
Designed to be manageable alongside full-time work, this programme will support small business leaders to develop their strategic skills with key modules covering financial management, innovation and digital adoption. 30,000 places will be available over 3 years. The programme is 90% subsidised by government – participants will be charged £750.
UK businesses from any sector that have been operating for more than 1 year, with between 5 to 249 employees are eligible. The participant should be a decision maker or member of the senior management team within the business.
Furthermore, beginning in April 2021, a new ‘super-deduction’ will cut companies’ tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130% of the cost. This is worth £25bn to companies over the two-year period the super-deduction will be in full effect.
However, to balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%. In order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.