What the 2021 Budget means for UK businesses?
Authored by NIG
We take a look at some of the key announcements from the March 2021 Budget which will affect UK businesses.
The Coronavirus Job Retention Scheme, also known as furlough, has been extended until the end of September 2021. The scheme provides businesses with grants to cover a proportion of employees’ usual wages if they have been furloughed due to reduced operations. Grants will remain at 80% of wages for hours not worked, up to a £2,500 monthly cap, until July 2021. After this point, the level of the grant will be tapered to reflect the fact the economy is opening up, and employers will need to contribute to furloughed staff’s wages.
The £5 billion Restart Grant scheme will see hospitality, leisure and non-essential retail businesses in England being able to access grants to help them reopen. Non-essential retail will be able to access grants of up to £6,000, while up to £18,000 will be available for leisure and hospitality companies.
The grants will be administered by local authorities.
To help ensure businesses can access finance while they rebuild and recover, Recovery Loans worth up to £10 million per business will be available from April to be used for any legitimate business purpose.
To help give lenders confidence, the loans will be 80% government backed.
The scheme launches on 6 April and is open until 31 December, subject to review. Loans will be available via a number of accredited lenders.
VAT discount for hospitality
The VAT discount for the hospitality industry, which sees eligible businesses paying a reduced rate of 5%, has been extended until 30 September 2021. A rate of 12.5% will then apply until 31 March 2022.
Business rates relief
The business rates relief holiday for eligible retail, hospitality and tourism businesses has been extended until the end of June 2021, after which rates will be discounted by 66% for the rest of the 2021-22 financial year.
Corporation tax increase
The rate of corporation tax will rise from 19% to 25% from April 2023. A new tapered system will also be introduced, linking rate of tax to annual profits. So, the current 19% rate will continue to apply to companies with profits of £50,000 or below, while different levels of tax will apply to annual profits between £50,000 and £250,000.
The Chancellor also announced a new ‘super deduction’ tax relief aimed at spurring investment. Businesses which invest in qualifying plant and machinery assets over the next two years will be able to reduce their tax bills by 130% of the cost.
The Chancellor said the Office for Budget Responsibility predicts the super deduction will see business investment increasing by as much as 10%.
Help to Grow
The government announced the new Help to Grow programme which is aimed at helping small and medium sized businesses learn new skills, reach new customers and boost profits.
The programme is divided into two parts:
- Help to Grow: Management, an Executive Development programme
- Help to Grow: Digital, free online advice and money-off software
At NIG, we are here to support you and your clients throughout this turbulent time. Head to the COVID-19 Hub via the NIG Risk Assist portal to access a range of guides and tools on reopening business and staying COVID secure.
Please continue to talk to your usual NIG contact about your clients’ changing insurance needs.
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