The Chancellor announced the Budget on 3 March. The Government’s spending plans this year aim to continue to aid businesses and jobs through the Coronavirus pandemic and to support a long term Coronavirus Recovery plan.
This blog will outline key points from the Budget, how this might affect businesses and the help available to business owners and individuals.
What are the changes to the furlough scheme?
The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021. Originally the scheme was due to end in April 2021. The Government will continue to pay 80% of employee wages for hours not worked, capped at £2,500 a month. However, as the economy begins to recover and restrictions are lifted, employers will be asked to contribute 10% of wages in July and then 20% in August and September.
Find out more about what it means to furlough employees and how to manage staff during the Coronavirus pandemic.
What help is available to self-employed individuals?
The self-employment income support scheme (SEISS) was introduced to provide financial support to self-employed individuals and has now been extended until the end of September. A fourth and fifth grant will be made available.
The fourth grant will cover the period of February to April and be worth 80% of three months average trading profits. This will be capped at £7,500 and be paid in one instalment.
The fifth grant will cover May to September and the amount available will be determined on a need basis. Individuals claiming the fifth grant whose turnover has fallen by 30% or more will receive the full grant of 80% of three months average trading profits, capped at £7,500. Those whose turnover has fallen by less than 30% will only be eligible for a 30% grant, capped at £2,850.
What support will be available to businesses?
The business rates holiday has been extended until the end of June. After this, for a six month period, business rates will be discounted by two thirds of the normal charge.
The 5% reduced rate of VAT introduced to help the hospitality and tourism sectors has also been extended until the end of September. After this a rate of 12.5% will apply until the end of March 2022 to help businesses return to standard rates of 20%.
The Government is launching the Restart Grant Scheme, which aims to support businesses that have been forced to close, to recover when they do reopen. When non essential retail shops open they can get grants of up to £6,000 and when pubs, restaurants, gyms and salons start to open according to the Government’s roadmap out of lockdown they can claim up to £18,000.
The Recovery Loan Scheme will be replacing the Coronavirus Business Interruption and Bounce Back Loan schemes. Eligible businesses will be able to borrow between £25,000 and £10 million to help support recovery and drive growth. The scheme will open 6 April and end in December 2021. Eligibility criteria for the loan are:
- business must be trading in the UK
- business has been affected by the pandemic
- business would be viable were it not for the pandemic
- business is not in insolvency proceedings
What is the Government doing to support jobs?
The Government’s aim is to ‘protect, support and create jobs.’ Some of the ways they plan to do this include:
- cash incentives of £3,000 per hire for companies taking on an apprentice
- the National Living Wage will increase to £8.91 per hour from April 2021
- there will be an extension of the £20 per week Universal Credit uplift and eligible Working Tax Credit claimants will receive a £500 one off payment
Other key points from the Budget
- the stamp duty holiday has been extended and is now due to end on 30 June 2021
- the introduction of the Guaranteed Mortgage Scheme, enabling both first time buyers and homeowners to secure a mortgage up to £600,000 with a 5% deposit
- the introduction of the Help to Grow scheme: programme to help SMEs grow by learning how to increase profits and reach a wider customer base. The Government has outlined the eligibility criteria
- allocation of £700 million to help UK arts, culture and sports institutions when they reopen
- freeze to income tax personal allowance until 2026
- the rate of corporation tax will rise to 25% in 2023, however, small businesses with profits of £50,000 or less will not be affected and only businesses with profits of £250,000 or more will be taxed at the full rate
For more information about the support available for your business visit our Coronavirus Business Help Centre and find out about support available for individuals on our Coronavirus Legal Help for Individuals Centre.