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Chancellor Rishi Sunak’s 2021 budget is arguably one of the most important for years, setting out plans to help businesses and the wider economy recover from damage caused by coronavirus, which has seen the economy shrink by 10% over the past year – the biggest drop in 300 years.
As expected, various schemes have been announced to help support British businesses. While the devil is in the detail and is likely to emerge over the next few days and weeks, here’s a look at the main points relating to businesses.
£5bn has been promised to High Street shops and those in the hospitality sector, with up to £18,000 available per business.
The Restart Grant is intended to allow businesses to reopen once restrictions allow. The money will come straight from local authorities, replacing the current monthly grant system and it’s thought almost 700,000 businesses – including restaurants, hotels and other hospitality businesses – will be eligible to receive it.
Non-essential retailers are expected to open on 12th April, and will be able to claim a grant of up to £6,000. As the hospitality industry will have to wait longer to open, businesses in this category will be able to claim up to £18,000.
Mr Sunak has said that this is just one of a number of measures that will be available to the hospitality sector.
Help for employees and the self-employed
The furlough scheme, which was due to end in April, has been extended until September, making it possible for business to retain their staff while their trade has stopped or reduced, with the government paying employees 80% of their wages for the hours they’ve been unable to work.
Employers will be expected to pay an increasing contribution towards their staff’s furlough costs as restrictions ease, paying 10% in July and 20% in August and September.
For those who are self-employed, the Self-Employed Income Support Scheme (SEISS) is being extended too. The fourth SEISS grant will cover the period from February to April, with grants worth 80% of three months’ average trading to a maximum of £7,500. The fifth and final grant will cover the period from May onwards and will be 80% of average monthly trading profits for businesses who have seen a drop of 30% or more in their turnover.
Self-employed individuals who have not suffered this drop in turnover will be able to get a grant worth 30% of their average trading profits.
Both of these grants will be based on 2019-2020 tax returns, which should include around 600,000 people who weren’t eligible for grants before – many of the newly self-employed missed out on previous grants because they hadn’t submitted a 2018-2019 tax return.
Training and development
MBA-style training will be made available to tens of thousands of small businesses in order to help boost activity. ‘Help to Grow’ will include online courses in management and digital skills, with 90% of the course costs being paid by the government. This is available for senior members of staff in businesses with 5 to 249 employees. Those taking part in the digital scheme will also be entitled to a 50% discount for productivity-enhancing software.
Businesses taking on trainees will also benefit, receiving £3,000 per trainee, increasing from £2,000. There will also be a new type of apprenticeship known as a ‘flexi-job’ apprenticeship, allowing apprentices to work with a number of different businesses within their training.
Overall, the Budget seems to be good news for businesses, with grants and training to help businesses as coronavirus restrictions lift and thing start to return to normal. However, this Budget has come with a warning that this level of support and funding is not sustainable, and that taxes will have to be increased in the future to make up for this. The Chancellor announced a rise in Corporation Tax in April 2023 to 25% from 19% for businesses with profits of over £250,000 – which applies to 1 in 10 businesses. This may be slightly offset by a ‘super deduction’ in tax of 130% for businesses investing in innovation.
However, businesses with a profit of less than £50,000 will be subject to a new Small Profits Rate which will see their Corporation Tax rate remain at 19%.
If you’d like to discuss what elements of the Budget are applicable to you and your business, how to identify the support you are eligible to and take steps to protect your business from future tax increases, get in touch with Purple Lime at firstname.lastname@example.org, or call 01249 691360.