2021 budget: what it means for small businesses

04-03-2021


After an unprecedented 12 months, Chancellor Rishi Sunak, delivered his second Budget 2021 on 3 March 2021 with this article looking at the highlights from the Budget affecting small business owners.

Small business mentoring

A new ‘Help to Grow’ scheme will be available for small businesses from June.

With the ‘Help to Grow: Digital’ component, firms will have access to free online advice on technology to help businesses save time, reduce costs and reach more customers. While the ‘Help to Grow: Management’ element will offer subsidised management training from business schools across the UK.

According to the Treasury, the scheme could help 130,000 small and medium sized businesses become more productive and widen access to opportunities for smaller firms to access the tools that larger companies can more easily afford.

For further details and to find out if your business is eligible to apply: https://helptogrow.campaign.gov.uk/

Furlough scheme extension

Protecting, creating and supporting jobs is a key focus of this Budget. Furlough will be extended until the end of September providing a crucial lifeline for businesses across the UK.  Under the scheme, the Government will continue paying 80% of employees’ wages, up to £2,500 a month, for hours they cannot work. Employer contributions will increase to 10% in July and 20% in August and September as the UK economy, hopefully, continues to recover.

£5bn of ‘Restart’ Grants

Sold as a plan to help save the struggles of the UK high street, a new Restart Grant scheme will help shut-down businesses reopen after lockdown.

Recovery loan scheme

The Chancellor commented that even with the Restart Grants, some businesses will also need loans to see them through. As such, the Recovery Loan Scheme opens on April 6 and is to take the place of the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme which will end on 31 March.

UK businesses of any size can apply for a loan or overdraft between £25,000 and £10m until the end of 2021. The Government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.

More information: https://www.gov.uk/guidance/recovery-loan-scheme

Apprenticeships and traineeships

The apprentice hiring incentive in England will be extended to 30 September 2021 and the payment increased to £3,000, regardless of the apprentice’s age. A flexi-apprenticeship scheme was also announced that will allow apprentices to work with multiple employers in a sector.

Those employers who provide trainees with work experience can continue to benefit from a payment of £1,000 per trainee.

Housing

After much speculation, the stamp duty holiday on house purchases in England and Northern Ireland is extended to 30 June, with no tax liability on sales of less than £500,000. Once the stamp duty holiday ends in June, the lower threshold at which buyers will start to pay stamp duty on a home will be £250,000 until the end of September.

Opportunity too for new home buyers who cannot afford large deposits. The Government will provide mortgage guarantees of up to 95% for purchases of up to £600,000, available from April.

Taxes

Corporation tax: the corporation tax rate will remain at 19% for business profits up to £50,000, but will have a tapered increase to a main rate of 25% for profits over £250,000 from April 2023. The Chancellor maintained that an estimated 70% of companies will be completely unaffected by the tax rise.

VAT: the VAT discount to 5% for food and drink sold in pubs and restaurants will continue until the end of September. It will then rise to 12.5% for another six months before returning to the full 20% rate in April 2022. No other changes are being made to VAT.

Business Rates : The 100% business rates holiday for eligible retail, hospitality and leisure businesses will be extended to the end of June  followed by a further six-month period where rates will be discounted by two-thirds of the normal charge, up to a maximum of £2m for closed businesses. The cap will be lowered for businesses that have been able to remain open.

‘Super deduction’ scheme

Expected to benefit capital intensive businesses such as manufactures, those in the infrastructure sector and utilities in particular, the Chancellor announced a new “super deduction” scheme to allow companies to be able to “deduct” investment costs from tax bills, reducing taxable profits by 130%. This new form of relief will be available for companies investing in qualifying new plant and machinery between 1 April 2021 and 31 March 2023.

Community fund to buy out community assets

From summer 2021, under a 4 year scheme, community groups will be able to bid up to £250,000 to save a nearby pub, social club or other qualifying community assets. The Government will match the money raised. In exceptional cases, up to £1 million matched-funding will be available to help establish a community-owned sports club or help buy a sports grounds at risk of being lost without community intervention.

Arts & Sports businesses

Recovery packages are available to support businesses in the art and sports sector with £400m to help arts venues in England, including museums and galleries, re-open and £300m recovery package for professional sport and £25m for grassroots football.

It is an unprecedented time for small business owners. If you would like to discuss what options are available for you and your business and how we can help, please click here to contact Hannah Davies.


Hannah Davies

Senior Associate
Corporate & Commercial Law

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