Wednesday’s highly anticipated Spring Budget placed a heavy emphasis on helping businesses get back on their feet as the economy looks to recover from the damaging effects of Covid-19.
Key takeaways from the Chancellor’s announcement included:
The Job Retention Scheme commonly known as the Furlough Scheme has been extended until 30 September
Self-Employment Income Support Scheme (SEISS) – there will now be a fourth grant which runs from Feb 2021 to April 2021 and a fifth one from May to September. Anyone who completed their 2019/20 tax return by midnight on 2nd March 2021, will now be eligible for the SEISS. This will help a further 600,000 self-employed workers.
A £5bn boost for high street shops and the hospitality sector through restart grants up to £18k per business premises.
Business Rates – the 12-month business rate holiday for the retail, hospitality and leisure sectors, estimated at over 750,000 businesses has been extended to 30 June 2021.From July 2021 until April 2022, a reduced rate will be introduced.
VAT in the hospitality sector – the current reduced rate of 5% will be extended until 30 September after which a special rate of 12.5% will prevail until 31 March 2022.
Community Ownership Fund – a £150m fund to help local communities purchase or take over community assets such as pubs, sports clubs, theatres, music venues and post offices at risk of permanent closure. Community groups will be able to bid for up to £250k matched funding.
£700m Extra funding for Arts, Culture and Sport
Help to Grow Scheme – a new £520m scheme to assist SME owners with the training and support to grow their businesses which is essentially made up of two parts:
Help to Grow Management – 000’s of business owners will be eligible for a subsidised( 90%) MBA style management training and mentoring in a 12 week course.
Help to Grow Digital – provides free, expert advice and discounts of up to 50% ( worth up to £5k each) on productivity enhancing software and digital transformation to help SME’s grow.
Boost to Traineeships Scheme – this scheme is designed to encourage employers to give young people work placements and vital business industry experience. Businesses that take on apprenticeships between April and September are eligible for a £3k sum regardless of age. A further “flexi-job” or portable apprenticeship initiative (£7m) is designed to give trainees the opportunity to have multiple placements with different employers within a certain industry.
Business Investment – The “Super Deduction” – for two years businesses will be able to reduce their tax bill by up to 130% when they invest in the right kind of new equipment, plant and machinery.
Recovery Loan Scheme – with the CBIL and BBLS initiatives set to end in March , from the start of the new financial year on 6th April lenders will be given government guarantees of 80% on loans to businesses of any size of between £25k and £10m through to the end of 2021. Companies that have previously received a Covid-19 loan will be eligible for additional finance under this replacement scheme.
In terms of having the means to pay for these measures the Government has announced :
Lower rate income tax threshold will rise to £12750 from next year but will remain frozen thereafter until 2026.
Similarly the higher rate tax threshold will rise to £50,270 but will remain frozen thereafter until 2026.
As widely reported , Corporation Tax currently standing at 19% will rise to 25% from April 2023. However the smallest businesses will be unaffected and only those companies with annual profits in excess of £250k will pay this full rate. Firms with profits less than £50k will remain on 19% while the rate will rise gradually for companies from 19% to 25% on profits between £50k and £250k.
With the Office of Budget Responsibility (OBR) predicting that the economy will return to its pre-pandemic levels by the middle of 2022, six months earlier than previously thought, the Chancellor’s budget was stated as “meeting the moment with a three-part plan to protect the jobs and livelihood of the British people.”