The Chancellor has set aside a further £65bn to support businesses, employees and the self employed to deal with the coronavirus pandemic as lockdown eases
Source: Editor, Accountancy Daily, published by Croner-i
As part of the recovery plan, the Chancellor set out a three-point plan to protect jobs and strengthen public finances, setting aside billions to support businesses and families through the pandemic, an investment-led recovery as UK emerges from lockdown and future changes to strengthen public finances, including a hike in corporation tax.
Chancellor Rishi Sunak said his immediate priority continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts – bringing total fiscal support to over £407bn. The covid support measures announced at the Budget amounted to £65bn.
He also set out plans to drive jobs, growth and investment to help the economy rebound – and spoke honestly about the tough choices required to put the public finances on a more sustainable path.
In line with the government’s roadmap for the cautious easing of social distancing rules, the Chancellor pledged to keep economic support in place until the country is out of lockdown.
The Coronavirus Job Retention Scheme will be extended to September and the Self-Employment Income Support Scheme (SEISS) will continue with a fourth and a fifth grant.
The Chancellor announced that more than 600,000 people, many of whom became self-employed in 2019-20, will now be able to claim direct cash grants under SEISS.
In addition, the business rates holiday in England has been extended by an additional three months. That means 750,000 retail, hospitality and leisure properties in England will pay no business rates for three months from 1 April when combined with Small Business Rates Relief, with further relief available for the rest of the year.
This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2m per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties.
To continue supporting the 150,000 businesses in the tourism and hospitality sectors and to protect 2.4 million jobs, the government has extended the temporary 5% reduced rate of VAT until 30 September 2021. To help businesses manage the transition back to the standard rate, a 12.5% rate will then apply for a further six months, until 31 March 2022.
Grant funding will be available to businesses in England through a new £5bn Restart Grant scheme to help the high street, providing up to £18,000, bringing the total spent on business grants to £25bn.
The Chancellor confirmed that Restart Grants in England will be available with up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality and other sectors that are opening later; and an additional £425m of discretionary business grant funding for local authorities to distribute.
A new Recovery Loan Scheme will also be launched in April to replace the existing government guaranteed schemes which have supported £73n of lending to date and close at the end of March.
This will provide loans between £25,001 and £10m, and asset and invoice finance between £1,000 and £10m, to help businesses of all sizes through the next stage of recovery.
In line with the policy to use card payments rather than cash, the Chancellor announced that it would more than double the legal limit for single contactless payments, from £45 to £100. This will allow banks to support single contactless payments up to £100, and cumulative contactless payments up to £300, without the need for customers to input their chip and pin. The government expects the banking industry to implement the new limits later this year.
A further £700m has been set aside to support the UK’s arts, culture and sporting institutions as they reopen, and a commitment to back the UK and Ireland’s joint bid to host the World Cup in 2030.
This extension of the Film & TV Production Restart scheme gives an additional £300m to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
The government has also set aside £90m funding to support national museums in England affected by the financial impact of Covid-19, and a £300m fund for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to watch live sport.
As part of the UK government’s Plan for Jobs to support, protect and create jobs, the Chancellor is increasing support with £126m of new money to enable 40,000 more traineeships, and doubling the cash incentive to firms who take on an apprentice to a £3,000 payment per hire.
The National Living Wage will be increased to £8.91 from April and there will also be a six-month extension of the £20 per week Universal Credit uplift, with eligible Working Tax Credit claimants receiving a one-off payment of £500.
To maintain momentum for the Covid-19 vaccination programme, the Budget will inject an extra £1.65bn to ensure the roll-out in England continues and invest a further £50m to increase the UK’s vaccine testing capability.