Here’s our take on Chancellor Rishi Sunak’s Budget.
The main measures affecting businesses include:
Extending the Job Retention Scheme until September, although employers will have to contribute 10% of wage costs from July rising to 20% in August;
Extending the Self-Employment Income Support Scheme until September with self-employed people now able to claim if they have filed a tax return for 2019-20;
A new Restart Grant from April for businesses closed by lockdown worth up to £6,000 for retail premises and up to £18,000 for hospitality, leisure, personal care and gyms;
New Recovery Loans to replace existing Covid loan schemes allowing businesses to borrow between £25,000 and £10m, with 80 per cent of the loan guaranteed by the Government;
The 5.0 per cent VAT rate for hospitality extended until September, then set at 12.5 per cent until March 2022 before reverting to 20 per cent;
The business rates holiday for retail, hospitality and leisure extended for three months with bills discounted by two-thirds for the rest of the 2021-22 tax year;
A new investment ‘Superdeduction’ allowing businesses to set 130 per cent of the cost of capital investment against tax in each of the next two tax years;
Raising Corporation Tax from 19 per cent to 25 per cent from 2023 but lower rates will apply for businesses with profits below £250,000 and those with profits below £50,000 will continue to pay at 19 per cent;
Companies will be able to carry back losses of up to £2m for three years;
The National Living Wage to rise by 2.2 per cent to £8.91 an hour from April;
Doubling the incentive payment for taking on apprentices to £3,000;
Freezing fuel and alcohol duties;
Freezing personal tax thresholds from 2021-22 to 2026 and leaving the VAT registration threshold at £85,000;
The ‘help to grow’ scheme run through business schools to help owners and managers of SMEsa improve their skills around strategy, innovation and digital technology.
Since the Chancellor’s speech, Budget papers issued also reveal that Carlisle and Workington will receive funding from the Towns Fund to “level up” towns and aid recovery from the Covid-19 pandemic. And Barrow has been placed in ‘category one’ making it a top priority for infrastructure funding from the Government’s Levelling Up Fund. Allerdale, Carlisle, Copeland and Eden are ‘category two’ while South Lakeland is in the lowest priority ‘category three’.
Suzanne Caldwell, Managing Director of Cumbria Chamber of Commerce, said: “There will be a collective sigh of relief when businesses digest the Chancellor’ s statement.
“We’d been lobbying hard through the British Chambers of Commerce for him to extend Covid support, and he’s done pretty much what we asked him to do.
“There a lot of wins here in terms of the Chancellor delivering on what Chambers asked.”
“The extension of the furlough scheme is particularly welcome for Cumbria because we had 41,400 furloughed workers at the last count and many of those people would have lost their jobs if the scheme had ended in April as it was going to.
“It’s good too that a lot of self-employed people who had been excluded will now be able to claim.
“The Restart Grants are welcome too but the new Recovery Loans aren’t as generous as the current Covid loan schemes – our message to businesses is, if you need to borrow do it now before the existing schemes close on March 31.”
She continued: “He admitted that the increase in Corporation Tax won’t be popular but at least he’s given two years’ notice, so businesses can plan. Also, businesses with profits below £50,000 – and that’s the case for many businesses in Cumbria – will be taxed at 19 per cent just as they are now.
“His masterstroke was the Superdeduction, which could unleash an avalanche of investment in plant, machinery and technology. In effect he’s paying businesses to invest.
“Governments always talk about boosting productivity – this will help do that and create well-paid, rewarding, jobs and help to create the wealth and tax revenues to pay off the debts incurred by the Government in dealing with this crisis.
“The one big disappointment is that Cumbria has missed out on getting a freeport. We were hoping that might happen but at least the Government is pressing ahead with the A66 upgrade and it’s good news that Carlisle’s and Workington’s bids to the Towns Fund have been successful.”
Listen to our Budget podcast with Suzanne and Amy Johnston and Sue Jeffrey of accountant David Allen:
Our Covid toolkit is updated regularly with the latest information on grants, loans, Covid restrictions and safe working. Keep checking it for the latest information.