Budget 2021: Furlough, business rates and VAT
The chancellor Rishi Sunak has extended the business rates holiday and the 5% reduced rate of VAT in his Budget presented on 3 March.
Sunak revealed that the government will continue with the 100% business rates holiday through to the end of June.
For the remaining nine months of the year, business rates will still be discounted by two-thirds, up to a value of £2m for businesses forced to close during the pandemic. Ultimately, this reflects a tax cut of £6bn for businesses.
The chancellor also announced that the 5% reduced rate of VAT will be extended for six months to 30 September. There will then be an interim rate of 12.5% for another six months until 31 March 2022; in total, VAT cuts will amount to £5bn.
The Budget confirmed the extension of the furlough scheme, which will also continue until the end of September, with additional payments of 10% and 20% introduced for employers starting in July.
Those who are self employed can benefit from an extension of the UK-wide Self Employment Income Support scheme to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
The chancellor then talked about the new restart grants (with a total value of £5bn) available to hospitality operators, who are eligible for up to £18,000 per site, as reported here.
A new UK-wide Recovery Loan Scheme has been created, to make loans between £25,001 and £10m available, and asset and invoice finance between £1,000 and £10m, for businesses of all sizes.
Small and medium-sized operators will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the government; and to further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company.
In terms of training, restaurant businesses will also note that the government is doubling the apprentice incentive payments it gives businesses to £3,000 for all new hires of any age; £7m has been designated for a new flexi-job apprenticeship programme in England that will enable apprentices to work with a number of employers in one sector; and an additional £126m was announced for 40,000 more traineeships in England, funding work placements and training for 16- to 24-year-olds in 2021/22 academic year.
Other issues covered include a freeze on all alcohol duty for the second year in a row (saving consumers £1.7bn); and the rate of corporation tax will go up from 19% to 25% in 2023, with an exemption for smaller businesses.
Sunak began his speech by outlining that the Office for Budget Responsibility is forecasting a swifter and more sustained economic recovery from Covid-19 than expected, with the economy returning to pre-Covid levels by middle of next year (six months earlier than previously thought).
Dine Out will update this story as the industry digests the details of what has been called 'the most important day in the history of hospitality'.