As thousands of businesses across the UK currently remain closed and continue to be hard hit financially, the Chancellor of the Exchequer, Rishi Sunak has announced a raft of new financial measures to help support these businesses impacted by Covid-19. As part of the Spring Budget, the Chancellor outlined his £65 billion ‘Three Part Plan’ to economic recovery as we forge a path out of the Covid-19 pandemic.
The plan will be put in place to support struggling businesses, pay for the response to the Covid-19 and invest in the future economy as a road to recovery.
As well as restart grants, the Chancellor confirmed an extension to the business rates holiday as well as several additional months of slashed VAT businesses operating in the hospitality and leisure sector, all of which will be welcomed in particular by the struggling high street and non-essential businesses that have been forced to close or operate under restrictions for the last 12 months.
Restart Grants – what businesses are eligible and how do you access them?
The Chancellor unveiled £5bn of restart grants to support businesses as they re-open after lockdown.
This one-off cash grant offers up to £6,000 per premises for non-essential retail businesses, rising up to £18,000 per premises for gyms, hospitality, accommodation, leisure and personal care. In the hope of providing support until 21 June 2021 (the PM’s proposed date of the final lifting of restrictions), the restart grants are available with the intention of ‘giving the cash certainty applicable businesses need, in order to plan ahead and safely relaunch trading over the coming months’. The grant amounts will depend on rateable value of the business.
The Restart Grant scheme will begin in April 2021, and can be accessed through local authorities and will replace the monthly local restriction support grants, which are due to close at the end of March 2021.
Details of the applicable local authority to your business and how to apply can be found here.
Recovery Loan Scheme
The Chancellor announced that the Coronavirus Business interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme will be replaced by the Recovery Loan Scheme.
Business of any size can apply for a loan or overdraft facility between £25m and £10m (and invoice financing between £1,000 and £10m from 6 April 2021 until 31 December 2021. Further details of the process are yet to be set out.
Help to Grow Scheme
Approximately, 130,000 small and medium sized businesses will receive support through the new £520m Help to Grow scheme. Applicable businesses can apply for a £5,000 grant to pay for Government approved productivity software, expert technology advice and management training with the view to closing the UK’s productivity gap compared to other rival economies.
Business Rates Holiday Extension
The business rates holiday aimed at high street businesses forced to close during the pandemic has been extended for another three months.
A recent survey by the ICAEW (Institute of Chartered Accountants in England and Wales) recently found that just 25% of members said their clients operating in the hospitality, retail, and leisure sectors would be able to pay business rates in full at the end of March 2021.
The Chancellor has extended the current business rates holiday until the end of June 2021. Following that, business rates will be discounted, from July 2021 until the end of March 2022 when businesses will get 66% relief. The amount that a business can receive will be capped at £2m for properties that had to close on 5 January 2021, or £105,000 per business for other eligible properties.
VAT Reduction for Hospitality & Tourism Businesses
The temporary VAT reduction to 5% for hospitality and tourism businesses will also remain until September 2021, after which it will increase to 12.5% until 31 March 2022 before finally returning to the normal VAT rate of 20% in April 2022.
Corporation Tax Increase in 2023
As part of the measures put in place to deal with paying for the Government’s response to the pandemic, the Chancellor announced an increase to Corporation Tax as part of the Spring Budget. This will not however, come into play until April 2023 where the rate of Corporation Tax paid on company profits will rise to 25%, subject to the following protections for businesses:
businesses with profits of £50,000 or less will continue to pay the current rate of 19%; and
the rate will then be graduated depending on profits – only businesses with profits of more than £250,000 will pay the full 25%.
The Chancellor outlined the corporation tax increase saying it was “fair and necessary”, for businesses to contribute to the UK’s recovery due to the high level of support they have received throughout the pandemic, and that only 10% of all companies will pay the full 25 per cent rate.
If you are looking for corporate law advice in relation to any of the announcements made in this week’s budget, please contact Farleys’ corporate law team on 0845 287 0939 or contact us by email.