Budget 2021: An overview
Chancellor Rishi Sunak has unveiled his full budget for 2021, aiming to protect the jobs and livelihoods of the British people through the remaining phase of the COVID-19 pandemic.
The Chancellor announced that he expects the UK economy to return to pre-COVID levels by middle of 2022, with annual growth set to rebound by 4% this year, followed by a 7.3% growth in 2022.
Unemployment is expected to peak at 6.5% in 2022, which is lower than 11.9% previously predicted.
The measures announced in the budget today include:
Extending the furlough scheme until the end of September.
Employees will continue to receive 80% of their current salary for hours they have been unable to work. From July, the Government will introduce an employer contribution towards the cost of unworked hours, 10% in July, and 20% in August and September.
The Self-Employed Income Support Scheme will be extended.
The Chancellor has confirmed there will be a fourth grant covering the period of February to April, equating to 80% of people's average trading profits. There will also be a fifth and final grant from May which will target businesses in industry's most affected by the pandemic.
600,000 people who have become self-employed in the last year are also now eligible to claim for the fourth and fifth grants.
Restart Grants to help businesses reopen.
Non-essential retail businesses will receive grants of up to £6,000. Hospitality and leisure businesses including personal care and gyms will open later or be under restrictions for longer, so will therefore be eligible for grants up to £18,000.
A new Recovery Loans Scheme.
Businesses of any size can apply for loans from £25,000 up to £10 million, through to the end of the year. The Government will continue to back the loans, providing lenders with an 80% guarantee.
100% business rates holiday will continue to the end of June.
For the remaining nine months of the year, the Government has announced it will cut business rates by up to two thirds. The vast majority of eligible businesses will receive a 75% cut in their business rates bill next year, totalling a £6 billion tax cut for business.
5% reduced rate of VAT for hardest hit sectors for six months.
150,000 businesses, such as those in hospitality and tourism, will pay a reduced rate of 5% VAT, with an interim rate of 12.5% from 1 October 2021, before returning to the normal rate from April 2022. The personal care industry is not part of the reduced rate of VAT.
In 2023, the rate of corporation tax will increase to 25%.
The Chancellor announced that small corporation tax will rise in 2023 to 25%. Small businesses will be protected from the increase, with the Government creating a Small Profits Rate, maintained at 19%, for businesses with profits of £50,000 or less, accounting for 70% of businesses.
The Government will introduce a taper above £50,000 so businesses only start paying the full rate on profits from £250,000. In total, it is expected only 10% of companies will pay the full rate.
Businesses investing in new equipment can offset costs against tax.
For the next two years, when businesses invest in any new equipment they can offset all of the cost against tax, plus an additional 30%.
Has Rishi Sunak delivered for Fashion and Retail? Read the responses from the British Retail Consortium, the British Fashion Council, The British Property Federation, retailTRUST and New West End Company here.