Chancellor Rishi Sunak has announced his budget to kickstart the economy after Covid – and it included some welcome surprises. Here, Andrew Diver, head of taxation at Beatons Group, has a look at some of the highlights from the Chancellor’s budget statement.
It was one of the most important budgets in living memory and looks to pave the UK’s way out of the economic turmoil the coronavirus pandemic has created.
A lot of money is being made available to ignite the economy, and with the Office for Budget Responsibility now forecasting a quicker recovery than previously predicted, it appears the government sees growth as the UK’s way out.
Furlough and self-employed
The extension of the furlough scheme until September was expected and will help protect against job losses while helping families who have been unable to work survive until the crisis comes to an end.
The budget also contained good news for the self-employed.
The Self-Employed Income Support Scheme is being extended with a further two grants and more than 600,000 people who became self-employed last year will now be included.
Business rates holiday
The continuation of the business rates holiday for hard hit sectors until the end of June is also welcome news and the fact it will be at a reduced rate for the rest of the year will help cushion the transition.
However, in my view the whole system needs to be reformed.
Business rates are not fit for purpose, especially with the prevalence of online businesses which have a substantial advantage over those with high street premises, for example.
I can understand why the Chancellor didn’t wish to include a dramatic overhaul of the system in this year’s budget but hope we will see this reformed once we are out of the woods.
The Chancellor’s budget announcement will come as good news for many businesses, with a raft of new grants and support schemes on offer.
The new Recovery Loans Scheme will give businesses the opportunity to apply for loans from £25,000 to £10million, with the government providing lenders with an 80% guarantee.
Restart Grants will help businesses hit hardest by coronavirus restrictions, especially those in the hospitality and leisure sectors.
As they are set to open first, non-essential businesses can apply for grants of up to £6,000 while those in hospitality and leisure, which open later, can apply for grants of up to £18,000.
The Super Deduction is unprecedented in the UK and will give businesses the ability to reinvest while reducing their tax bill.
The extension on the cut on stamp duty to September is also positive and will keep the housing market moving.
This is not just good for those buying a home, but also for the businesses in that sector.
Finally, the creation of a Freeport at Felixstowe and Harwich is a real boost for business in the east and will hopefully see an increase in investment and trade in the region.
Recouping the coronavirus cost
The Chancellor’s increase in corporation tax on profits, to 25% in 2023, is an interesting move and looks to recover some of the money the UK now owes.
The Chancellor said the government is creating a small profits rate, of 19% for businesses with profits £50,000 or less, meaning 70% of companies won’t be affected.
The UK Government is trying to recoup some of the money that has been handed out as part of the support packages but appears to be trying to limit the impact on businesses having tough times.