On 3 March 2021, the Chancellor Rishi Sunak unveiled his Spring Budget to the House of Commons.
Sunak set out the government’s tax and spending plans for the coming 12-months, the most anticipated of which included his plans to help businesses get through the pandemic, including an extension of the furlough scheme to September.
He also outlined his plans to support the UK’s economic recovery, which is forecast to be quicker and more sustained that previously predicted.
Here, our HR and Employment Law experts have created an overview of the most important points for business owners.
The Office for Budget Responsibility is now forecasting a swifter and more sustained recovery than they predicted last November. They are now forecasting that the economy will return to its pre-COVID level by the middle of 2022. They predict the economy will grow by 4% this year, 7.3% next year and 1.7%, 1.6% and 1.7% in the following 3 years. They have revised their unemployment forecast downwards from a peak of 11.9% to 6.5%.
To protect jobs and livelihoods for the remaining phase of this crisis, they will extend the furlough scheme until the end of September. For employees, there will be no change to the terms (still 80% of pay for hours lost) throughout the duration of the scheme – subject to the existing caps. Employers will be asked to contribute to the scheme in phases:
There will be a fourth grant of the self-employed support scheme (covering the period February – April) and a fifth and final grant (covering the period from May onwards). The fourth grant will be paid on the basis of 80% of average trading profits but the fifth grant will be more targeted. Those whose turnover has fallen by 30% or more will continue to receive the full 80% grant, but those whose turnover has fallen by less than 30% will receive a 30% grant. The Chancellor announced a long-called for change to the self-employed scheme to cover those who were newly self-employed at the time the scheme was launched (and were therefore excluded from its support). Provided they have filed a tax return by midnight on Tuesday 2 March, they will now be able to claim the fourth and fifth grants (this should extend the scheme to cover an additional 600,000 people).
The incentive payment to businesses to take on apprentices is being doubled to £3000 – this will cover all new apprentice hires of any age.
A new restart grant will be available from April to help businesses re-open. Non-essential retail businesses will receive grants of up to £6000 per premises. Hospitality and leisure businesses, including personal care businesses and gyms, will receive grants of up to £18,000. A fund of £700 million will be available to help re-open arts, culture and sporting institutions.
A new recovery loan scheme is being introduced to replace the current COVID loan support. Businesses of any size can apply for loans from £25,000 up to £10 million through to the end of 2021 (80% backed by a government guarantee to lenders).
The 100% business rates holiday in England for all eligible businesses in the hospitality and leisure sectors will continue until the end of June. For the remaining nine months, business rates will still be discounted by two thirds up to a value of £2 million for closed businesses and a lower cap for those who have been able to stay open.
For businesses in the hospitality and tourism sector, the 5% reduced rate of VAT will be extended by 6 months to the end of September and after that, they will have an interim rate of 12.5% for another 6 months, returning to 20% in April 2022.
The government are providing £100 million to set up a new HMRC taskforce (around 1000 investigators) to investigate fraud against the furlough scheme and other COVID support schemes. They will also be introducing new investment and measures to clamp down on tax avoidance and evasion.
The government are launching a national scheme of management training delivered through business schools to SMEs – 90% funded by the government (Help to Grow Management). SMEs will also be able to access digital skills training and discounts of up to 50% on new productivity-enhancing software. These programmes will be available in the Autumn, but businesses are encouraged to register today
Our experts are always tracking key updates from the government and legislation changes to make sure your business is up to date and compliant.
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