What can businesses take from Budget 2021? | moneyfacts.co.uk

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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 03/03/2021

In the Budget 2021, the Chancellor made a number of announcements to help businesses survive the challenging months ahead and to prepare the UK economy as it starts to unlock during the Summer.

The Chancellor stated that he would continue to do “whatever it takes” to support jobs and businesses. The Government has spent £280bn so far on Coronavirus support schemes but the damage to the UK economy remains acute. Since March 700,000 jobs have been lost and the economy has shrunk by 10% the largest fall in 300 years.

The recovery though is now expected to be faster than previous estimates in November 2020 and according to the Office for Budget Responsibility the economy should return to pre Covid-19 levels by the middle of next year, six months earlier than previous forecasts.

The Chancellor stated his first priority was to continue funding to support jobs and businesses, but he also needed to set out how public finances would be fixed and the start of building the UK’s future economy.

Extended furlough scheme

The Chancellor announced that the furlough scheme, previously set to close at the end of April, will now be extended to September 2021. The furlough scheme pays 80% of employee’s wages for the time when they cannot work due to the pandemic. In July businesses will be asked to contribute to their employee’s wages on furlough starting at 10%, increasing to 20% in August and September.

Access to self-employed grants extended

A fourth and fifth grant will be made available under the Self-Employment Income Support Scheme. 600,000 more self-employed people are to be eligible for grants as long as they submitted their 2019/20 tax return by midnight last night. The Self-Employment Support Scheme offers up to 80% of trading profits up to a maximum of £7,500 over three months.
The fifth and final self-employed grant will open from late July and will be more targeted to support those most affected by the pandemic. Self-employed businesses that have seen a reduction in their business of 30% or more will continue to receive the 80% grant. Those with a lower reduction will only receive 30%.

The Chancellor stated that by the end of the scheme a total of £33bn will have been spent supporting the self-employed.

Business grants

There will be a new business grant of up to £6,000 per premises for non-essential retail businesses and up to £18,000 for those in the hospitality sector and those businesses required to open later due to Coronavirus restrictions.

A new Government backed business loan scheme

A new business loan scheme will be launched to replace the Coronavirus Business Interruption Loans Scheme (CBILS) and Bounce Back Loans. The new scheme retains the same 80% government guarantee as CBILS and will run until the end of 2021. Businesses of any size will be able to apply for loans of between £25,000 to £10m. The Chancellor gave no further details in his speech about the scheme or the lenders that will join this.

Hospitality, tourism and leisure - business rates and VAT reduction

Last year the government provided a 100% business rates holiday for all businesses in the retail, hospitality and leisure sectors. This year, the rates holiday will continue for the first three months of the new tax year, from April to the end of June 2021. For the remaining nine months business rates will be discounted by two thirds, up to £2m for closed businesses and with a lower cap for those businesses that have remained open.

In addition, the sector will also continue to have the reduced rate of VAT at 5% until 30 September 2021. After this VAT will rise to 12.5% for six months, returning to the standard rate in April next year.

Corporation tax

Corporation tax will see some changes from April 2023 with businesses of more than £250,000 of profits seeing their rate increase from 19% to 25%. Businesses with profits of less than £50,000 will pay 19%, while those with profits of between £50,000 and £250,000 will pay a tapered percentage.

The Chancellor summarised that his budget aimed to support people and businesses through the immediate crisis, while paying close attention to the cost of borrowing in the medium term and looking to invest in capital projects for future growth.

Business loans

Businesses that want to discuss applying for CBILS before it closes this month can speak to our specialist business broker.


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