On Wednesday 3rd March 2021, Chancellor Rishi Sunak unveiled his Budget. Along with a string of measures to support the economy recover from Lockdown there were changes to the tax regime that will affect businesses and entrepreneurs
The Hospitality Industry
- The furlough scheme will be extended until the end of September
- The Government will cover 80% of salaries until the end of June (with employers paying National Insurance and Pension contributions)
- Employers will pay 10% towards the hours their staff do not work in July
- This will increase to 20% in August and September
- Communities will be given the opportunity to buy their local pubs and run them as community owned businesses. Groups will be able to bid for up to £250,000 of government-matched funding
- Arts Businesses (like theatres, cinemas and museums) will be able to access an additional £300m in the £1.57bn Culture Recovery Fund to help with reopening
- A £5bn grant scheme has been unveiled to help High Street shops and hospitality firms in England reopen after lockdown. Grants will be a maximum of £18,000 per business
- Eligible retail, hospitality and leisure businesses will pay no business rates for three months and have up to 66% relief for the rest of the year
- The Government will extend the VAT cut for hospitality and tourism businesses so it remains at 5% until the end of September
- Alcohol duty will be frozen for the second year in a row
Food & Drink Product Businesses
- The furlough scheme will be extended until the end of September
- The Government will cover 80% of salaries until the end of June (with employers paying National Insurance and Pension contributions)
- Employers will pay 10% towards the hours their staff do not work in July
- This will increase to 20% in August and September
- Alcohol duty will be frozen for the second year in a row
SMEs and Entrepreneurs
- Increase in corporation tax:
- Corporation tax will increase from 19% to 25% from April 2023
- Companies with profits of less than £50,000 will still pay 19%
- The Government will launch the £520m Help To Grow Scheme:
- This will provide free online ‘MBA-style’ management training for top business schools.
- It will also fund 50% discounts on new productivity-enhancing software
- The traineeship scheme will be boosted:
- The Government will increase the payment it makes to firms per trainee from £2,000 to £3,000 for hires made between 1st April and 30th September 2021
- A new “flexi-job” apprenticeship will launch in England so apprentices can work with multiple employers in one sector
- Personal tax allowances will go up slightly and then be frozen until 2026:
- Tax free allowances increases from £12,500 to £12,570 and then freezes
- Higher income tax (40%) threshold increases from £50,000 to £50,270 and then freezes
- The Self-Employment Income Support Scheme will be extended
- The fourth grant will cover February to April, worth 80% of average trading profits up to £7,500
- A fifth grant will be available from July
- The Government will launch a “super-deduction” tax break for firms that invest, allowing companies to reduce their tax bill by 130% of what they spend on investment. Currently, a firm spending £10m on equipment gets a £2.6m tax reduction. Under this plan it would get one worth £30m
- The Government launches eight freeports: East Midlands airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent.