Was the budget a blockbuster for business?
All eyes were on Chancellor Rishi Sunak’s Budget this week as he unveiled how he would create an environment where businesses can grow and recover from the pandemic, whilst also clawing back the vast sums of money that Covid-19 has cost the UK economy.
Now the dust has settled, was it a ‘Budget Bonanza’ or a ‘Budget Buster’ for UK businesses?
Simon Roberts, tax partner at chartered accountancy and business advisory firm Hentons, which has offices in Leeds, Sheffield, York, Thirsk, and London, said: “The promise of a blockbuster budget was in the offing, but some will be forgiven for thinking that the Chancellor has kicked the can down the road.
“Businesses and their owners will be breathing a sigh of relief though that coronavirus relief measures continue for now and increased taxes will largely take effect in the future, after the anticipated return to normal economic activity levels.
“Embattled importers and exporters are likely to welcome the opportunities that eight new Freeports will present them with. The much debated complete withdrawal of Business Asset Disposal Relief and changes to Capital Gains Tax rates were notably absent from the speech, and many business owners whose planned retirements have been put back by Coronavirus will be elated that their retirement plans may still come to fruition, eventually.”
“There were also exciting plans revealed for Leeds as it was chosen to be the location for a new Green Bank, capitalised initially with £12bn, with a mandate to finance a Green Industrial Revolution in the United Kingdom.”
Key points from the Budget include:-
• Furlough Scheme will continue to 30 September 2021.
• The employer’s grant will contribute 10% in July and 20% in August and September, in recognition of the economy reopening.
• Further SEISS grants will be available to the self-employed. For the final SEISS grant, those whose turnover has dropped less than 30% will get a grant of 30% of average monthly income capped at just £2,850.
• Universal Credit £20 per week bonus is extended.
• Doubling of the apprentice grant for employers.
• The government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
• Additional funds are being made available to local authorities to provide discretionary grants too, although the criteria for entry is not yet known.
• Funds made available to prop up various sectors and businesses that are culturally important.
• Whilst there are measures for museums, sports, women’s Euros, film and TV restart, there is nothing for live music and the music industry generally.
• From 6 April 2021, Recovery Loans will be available, ranging from £25,000 to £10 million, and the government will guarantee 80% of the loan, with the scheme appearing to be open to those who have already accessed support under the existing Covid-19 guaranteed loan schemes.
• The current reduced VAT rate of 5% on some supplies made by hospitality and tourism businesses will not end as planned but will continue until 30 September 2021. A new 12.5% rate will be introduced for the 6 months ended 31 March 2022.
• Eligible retail, hospitality and tourism businesses will continue to get 100% Business Rates Relief from 1 April 2021 to 30 June 2021. The same businesses will get 66% relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible businesses
• The government will extend the temporary increase in the residential Stamp Duty Land Tax nil rate band to £500,000 in England and Northern Ireland until 30 June 2021. From 1 July 2021, the nil rate band will reduce to £250,000 until 30 September 2021, before returning to £125,000 on 1 October 2021.
• The government will introduce a new mortgage guarantee scheme in April 2021 providing a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000.
• The income tax Personal Allowance will rise with CPI as planned to £12,570 from April 2021 and will remain at this level until April 2026. The income tax higher rate threshold will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026. National Insurance will follow the same pattern.
• The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate but more than the standard 19% we pay now.
• From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. This upfront super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.
• Freeports will begin operations from late 2021. These will contain areas where businesses will benefit from more generous tax reliefs, customs benefits and wider government support.
• The inheritance tax nil-rate bands will remain at existing levels until April 2026. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000.
This was posted in Bdaily's Members' News section by Emma Mortimer .
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