Please note: The information contained in this article is correct as of 15:00 – 03/03/21. As more information on the government budget announcements is released, we will do our best to update this article but if you require specific legal advice on any of the topics included, we would always advise you speak with a solicitor.
The Chancellor, Rishi Sunak, has today announced the government’s budget for the year ahead. After a year of unprecedented challenges, the Chancellor has extended some of the economic support put in place in response to the pandemic.
£280 billion of financial support has been provided by the government since the coronavirus pandemic began and the Chancellor has announced more to come.
Here is a brief run-down of the main announcements which could impact you and your business:
After being closed for much of the last 12 months in some areas of the country, nearly 700,000 ‘non-essential’ businesses including shops, restaurants, hotels, hair salons, and gyms will be eligible for “restart grants”. The grants will be distributed directly to firms by local authorities from April and the amount available will depend on the industry within which the business operates and it’s reopening dates. Non-essential retailers can claim a restart grant of up to £6,000 per premises while hospitality, leisure, personal care and gyms can claim grants of up to £18,000. It will replace the current monthly grant system.
The 100% business rates holiday which has been supporting business in the retail, leisure and hospitality sectors forced to close their premises during the pandemic has been extended at its current rate until June. After this there will be a discount of 2/3 up to £2 million depending on whether/when the business has been able to open for the remaining 9 months.
Community Funds to Buy Pubs
Hospitality has arguably been one of the hardest hit sectors during the pandemic, bearing the financial brunt of numerous lockdowns. Pubs which were already facing financial difficulties are now facing permanent closure.
Describing these venues as “the heart and soul of our local towns and villages”, the chancellor has promised a £150m pot to help communities take over local pubs at threat of closure. Under the fund, which will open in the summer, community groups will be able to bid for up to £250,000 of matched-funding to help them to buy local pubs to run as community-owned businesses.
In “exceptional cases” up to £1m will also be available to community groups to buy their local sports club.
Furlough Scheme Extended Until September
The government’s Coronavirus Job Retention Scheme (also known as the furlough scheme) has been further extended until the 30 September.
The extension means furloughed employees will continue to receive 80% of their current salary, up to £2,500 a month. Employers will be asked for a contribution of 10% from July and 20% in August and September. They already have to pay pension and National Insurance contributions.
At its peak last Spring, 8.9 million workers were covered by the UK furlough scheme. While demand dropped for the scheme, as the country adapted to restrictions imposed by the Government, 900,000 jobs were still furloughed in January 2021 giving a clear indication of the importance of the scheme for businesses. This is the second time the scheme has been extended having previously been due to finish in October 2020 and March 2021.
Traineeships and Apprenticeships
As the unemployment rate continues to rise, with 700,000 jobs lost since March, the government is encouraging businesses to continue hiring where possible with improved grants for employers taking on apprentices.
Currently, firms in England are given £2,000 for every new apprentice they take on under the age of 25, and £1,500 for those over 25, in addition to a £1,000 grant they are already getting under another project. It has been announced that the cash incentives for employers who take on an apprentice will increase to £3,000 – regardless of age.
A new “flexi-job” apprenticeship will also enable apprentices to work with a number of different employers in one sector.
National Living Wage Increase
The National Living Wage will increase from April to £8.91 per hour.
Stamp Duty Holiday Extended Until June
The Stamp Duty holiday for properties up to £500,000 has been extended until 30 June. From 1 July, Stamp Duty will then only be paid on properties over the value of £250,000 until the end of September. From October the normal rate of Stamp Duty Land Tax will resume. For investment property or second homes the 3% Higher Rate will still apply on the full purchase price.
Mortgage Guarantee Scheme
A mortgage guarantee scheme has been announced in a bid to help prospective home-owners with small deposits get on the property ladder.
The government will offer guarantees to lenders offering 95% mortgages. In recent times, these types have mortgages have virtually disappeared. The new scheme will not be restricted to first-time buyers or new-build homes, but there will be a £600,000 limit. The Chancellor announced that from next month the mortgages will be offered by well-known lenders.
Tax Threshold Freezes
To offset there being no increase in income tax, National Insurance or VAT, there will be a freeze in the threshold for personal tax until 2026 after the threshold is increased next year to £12,570 and £50,270 (higher rate tax threshold).
Inheritance tax, pensions lifetime allowance, and capital gains tax thresholds have been frozen and corporation tax paid on company profits will increase to 25% from April 2023. There will be a small profits rate for small businesses with a profit of £50,000 or less which will be 19% and a tapering rate will mean that only businesses with profits of £250,000 or more will pay the full 25% rate.
The VAT reduction to 5% for hospitality, accommodation and attractions businesses will continue until 30 September, after which there will be an interim VAT rate of 12.5% until April 2022.
The Chancellor has announced £100 million to create a HMRC taskforce to tackle COVID-related fraud, including furlough fraud.
Domestic Violence Support
A fund of £19 million on top of an already pledged £125 million has been announced for domestic violence programmes and supporting survivors of domestic violence.
This is just a brief overview of the main points of the Chancellor’s budget announced today. As more information is released, we will provide more details on the changes which may affect you, your family and your business. If you would like to receive updates please sign up to our mailing list. To speak to a legal specialist about a particular matter, please call 0845 287 0939 or send your enquiry by email and a member of the specialist team will get in touch with you.
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