3rd March 2021
Please find below a summary of some of the relevant key announcements in today’s budget.
We are pleased to see the extension of the CJRS and the rates relief and grants for retail leisure and hospitality albeit that they will not be as generous as previously.
We are however deeply frustrated that the Chancellor did not take the opportunity to include seaside amusement arcades in his 5% VAT relief. He was also totally silent on support for supply chains. That is a huge oversight and jeopardises the recovery. For companies so badly affected the 25% Corporation Tax rate from April 2023 for companies with profits over £250k is a kick in the teeth. New loans are just adding more debt to already distressed companies. We have written to the Chancellor to make these points very forcibly.
- OBR expects economy to grow by 4% this year – forecasting a “swifter and more sustained recovery” than they were expecting in November.
- Now expected that the economy will recover to its pre-Covid level by the middle of next year – six months earlier than previously expected.
- There will be growth of 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the following years.
- In five years’ time, the OBR still expects the economy to be 3% smaller than it would have been.
- This year the UK has borrowed £355bn. 17% of national income. Next year borrowing will be 10.3% of GDP. Because of the measures taken today, it will fall to 4.5% of GDP in 2023, then 3.5%, then 2.9%, then 2.8%.
- The 100% Business Rates Holiday will continue until the end of June. For the remaining nine months of the financial year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses.
- The 5% reduced rate of VAT will be extended for six months to 30th September. It will then have an interim rate of 12.5% for another six months.
- Gaming Duties will rise in line with RPI.
- A new Recovery Loans Scheme will come into force in April, where businesses of any size can apply for loans from £25,000 – £10,000,000, through to the end of this year. Government will guarantee up to 80% of lending by providers.
- Furlough scheme will be extended until the end of September. From July onwards, the Government will introduce an employer contribution towards the cost of unworked hours – 10% in July, 20% in August and September.
- A new Restart Grant Scheme: £5bn fund to help High Street shops and hospitality firms recover with non-essential retail eligible for grants up to £6,000 and hospitality and leisure businesses more impacted eligible for grants up to £18,000.
- In 2023 the rate of corporation tax, paid on company profits, will increase to 25%. a new Small Profits Rate at 19% will be introduced for businesses with profits of £50,000 or less. Above £50,000, the Corporation Tax will be tapered so only those with profit of over £250,000 pa will pay the full 25%.
- Income Tax, VAT and National Insurance triple lock will remain in place – but Income Tax thresholds will be frozen until 2026 following this years planned uplift.
- Extended loss carry back for businesses – up to £2,000,000 can be carried back for up to three years (specifics depend on company status).
- Super Deduction: for the next two years when companies invest in new equipment they can offset all of the cost against tax, plus an additional 30%.
- National Living Wage rise will continue as planned in April.
- Incentives payment for apprentices has been doubled to £3,000 per apprentice.
We will go through the detail and let members know if there any further key changes.