The Chancellor has unveiled the contents of his Budget. The statement outlined the governments financial package to support business recovery giving firms more clarity on the way ahead and will allow many to plan with greater optimism and confidence as they look to rebuild over the coming months fixing the foundations of our economy.
The plan had 3 major points; a plan to continue supporting people and businesses through the pandemic, an honest assessment of what will need to be done to recover and finally a plan to build a new future outside the EU.
Coronavirus Support
For those businesses that are still closed or facing reduced demand due to restrictions the chancellor’s plan to support people through the coming months and rebuild the economy will ease many cash low concerns and protect livelihoods.
The furlough scheme, which pays 80% of employee wages that cannot work due to the pandemic has been extended until the end of September. Originally due to close in April, many businesses had warned that even with restrictions being loosened many businesses will be unable to open or be operating at a reduced level that reduced demand will not allow them to fully get back profits lost due to months of tight restrictions. Read more here
The government also announced further support for the self-employed. Many who have felt left behind in the governments support package, welcome this new support. The Chancellor announced support for the self-employed will be extended until the end of September with 600,000 more people eligible for support. Read more here
£700m has been pledged to support the arts sector who have been amongst the worst affected during the last 12 months.
The business rates holiday is set to continue until the end of June with a two-thirds discount for the remainder of the tax year, meaning a £6 billion tax cut for businesses.
Reduced rate of 5% VAT for the hospitality and tourism sectors has been extended to the end of September, and will only go up to 12.5% after that, before returning to 20% next April.
New Taxation measures
The Chancellor also warned that “corrective action” would be needed to tackle the UKs rising debt:
- There will be no changes to rates of income tax, national insurance or VAT.
- Personal income tax allowance to be frozen at £12,570 from 2022 to 2026
- Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
- Corporation tax on company profits to rise from 19% to 25% in April 2023
- Rate to be kept at 19% for about 1.5 million smaller companies
The chancellor also announced a brand new “Super Deduction” to businesses tax bill, the reduction will see companies reduce their tax bill by 130% when companies invest. This will be the biggest business tax cut in modern British history and will look to incentivise business investment
Read more about the new taxation measures here
Future Economy
Finally the budget unveiled the governments plan for a new “future economy” The Chancellor said that, while we face challenging times, we will rise to that challenge and we can be optimistic about the recovery. He said the Budget will begin the work of building our future economy.
The first ever infrastructure bank will be located in Leeds, leading to investment in public and private projects to finance a green industrial revolution.
New “Help to Grow” schemes were also announced helping small businesses to develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each.
Also announced were 8 brand-new free ports, which are “special economic zones with different rules to make it easier and cheaper to do business”. The free ports will have simpler planning, infrastructure funding, cheaper customs and lower tax rates.
Read more about the future economy announcement here
Sharon Smith, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce, said: “Many business concerns have been addressed in the Chancellor’s Budget Statement with extensions to major schemes such as the furlough scheme, VAT reductions and business rates holiday.
“The extra to support aimed at the self-employed is also welcomed, with an addition 600,000 people eligible to support.”
“The chancellor knows that businesses may not be completely ready to stand on their own when economy re opens. This longer-term support will give businesses confidence and provide economic sustainability throughout the year.”
Dr Adam Marshall, Director General of the BCC, said: “There’s much to welcome in this Budget for business communities across the UK. The Chancellor has listened and acted on our calls for immediate support to help struggling businesses reach the finish line of this gruelling marathon and to begin their recovery. Extensions to furlough, business rates relief and VAT reductions give firms a fighting chance not only to restart, but also to rebuild.
“We particularly welcome the massive ‘super deduction’ investment incentive that the Chancellor has put in place for the next two years. This responds directly to our call to encourage those businesses that can to invest and grow.
“While no business will relish paying higher rates of Corporation Tax in future, the impact of the Chancellor’s tough decision is blunted by the big new incentives for investment, lower rates for the smallest firms, and the extension of Coronavirus support measures in the short term.
“This Budget provides reassurance to businesses, provided that they are able to restart and rebuild according to the Government’s road map. If firms face unexpected bumps in the road, the Chancellor must be prepared to take action until the economy is firing on all cylinders again.”
- View or download the budget summary here
- Keep up to date with the latest announcements on our social media platforms, follow us on Facebook, Twitter and LinkedIn.