The UK has seen its economy shrink by 10% over the past year, the largest shrink in 300 years, so the 2021 Budget could be seen as one of the most important in recent times. In it, the Chancellor of the Exchequer, Rishi Sunak, set out plans to help businesses as COVID-19 restrictions lift and life starts to get back to normal.
While it will take a while to go through the whole Budget in detail, here are some of the key points for SMEs and business owners.
Shops and hospitality
A Restart Grant has been confirmed for some of the businesses hit hardest by restrictions as they head towards reopening. Non-essential retailers are set to open on 12 April and will be able to claim up to £6,000. While those in hospitality must wait longer before they can reopen and will therefore be entitled to claim up to £18,000 per business.
The money will come directly from local authorities and will replace the current system of monthly grants. It’s thought that almost 700,000 businesses will be eligible for these grants, and the Chancellor has said that this is just one of a number of measures which will be available to the hospitality sector.
Employees and the self-employed
Businesses will be able to furlough their staff until the end of September. The scheme was due to end in next month, but as it has been deemed successful in reducing the predicted number of people made unemployed, it will continue for businesses whose trade has reduced or stopped.
To help plan ahead, employers will have to contribute more to the furlough scheme with 10% of the furlough costs in July and 20% in August and September.
The Self-Employed Income Support Scheme (SEISS) is also being extended. There will be a fourth grant to cover from February to April, worth 80% of three months’ average trading, and a final grant for May onwards. This final grant will vary depending on how your business has been affected by restrictions – if you have had a drop of 30% or more in your turnover, you will still receive 80%. However, if your turnover has remained above this threshold, you’ll be awarded 30% of your average trading profits.
The fourth and fifth grants will be based on the 2019-20 tax return figures, so grants should be available to around 600,000 people who could not claim before, most of these being people who were newly self-employed.
Increasing productivity through training and development
The Government is investing huge amounts into MBA-style training for small businesses. ‘Help to Grow’ aims to increase productivity by giving businesses and business owners the skills they need to be successful. If your business has between 5 and 249 employees, senior members of staff can register for the management course, which is being 90% funded by government. There is also a digital scheme, where participants will also be entitled to a 50% discount on software to improve productivity levels.
If you take on trainees, there will be increased benefits too. The amount of money a business receives will increase from £2,000 to £3,000 per trainee, and new ‘flexi-job’ apprenticeships will allow apprentices to work with more than one business over the course of their training. Both schemes will allow more businesses to benefit from, and upskill, the workers of the future.
All of this investment and recovery needs to be funded, and this Budget is placing the onus on businesses rather than individuals.
Corporation Tax will rise in April 2023, to 25% for businesses with profits over £250,000 – around 1 in 10 UK businesses. However, if your business makes a profit of less than £50,000, it will fall within a new Small Profits Rate, which will keep Corporation Tax at 19%.
There is a chance to avoid some of this increase, with the Chancellor promising a ‘super deduction’ in tax of 130% for investments in innovation – again, part of the effort to increase productivity and put the UK at the leading edge of industry.
To find out what the Budget means for you, what support you are eligible for and the steps you can take to protect your business now and in the future, get in touch with us at email@example.com or call 01249 691360.