On March 3rd, Chancellor of the Exchequer Rishi Sunak set out the UK Budget for the year ahead. After 12 months of investment across many different areas of business, the government is set to continue providing financial support and, in some cases, ramp up provisions, for UK companies. Here’s what franchisees need to know about the Budget 2021.
After the radical changes and various financial measures introduced throughout 2020, there was much speculation about how the fiscal plans for 2021 would look. Rishi Sunak has now made his Budget statement to MPs in the House of Commons, revealing how the government will change taxes and spend money.
In the past financial year, the government has borrowed over £270 billion - £222 billion more than the previous year. Now, the UK is in £2.13 trillion of debt, which equates to 99 percent of our GDP, the total value of all goods and services created by the UK. The Budget 2021 is a £65 billion, three-point plan with the aim of leading the UK to recovery as it emerges from the pandemic.
How will the Budget 2021 affect business owners?
The UK Budget 2021 is an extensive set of provisions, but here are the considerations you’ll need to know if you’re running your own business:
- The Coronavirus Job Support Scheme will be extended until September 2021.
Grants and loans
- £5 billion has been earmarked for Restart Grants to give hospitality, accommodation, leisure, personal care and gym businesses in England a one-off payment of up to £18,000 each.
- A new UK Recovery Loan Scheme will provide sums of £25,001—£10 million, as well as asset and invoice finance worth £1,000—£10 million, to help businesses bounce back.
- A new Help To Grow scheme will give up to 130,000 UK businesses a digital and management ‘boost’.
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- VAT will continue at its reduced rate of five percent for businesses in the hospitality, accommodation and attraction sectors until the end of September 2021; then, it’ll go up to 12.5 percent for the next six months until 31st March 2022.
- Around 750,000 eligible businesses across the retail, hospitality and leisure sectors in England will be able to access business rates relief.
- The ‘loss carry back’ system will remain in place for up to £760,000 per business.
- From 2023, Corporation Tax will increase to 25 percent, the lowest rate in the G7, for businesses making more than £250,000 in profit - the bands will taper for less profitable companies, and those generating under £50,000 in profit will continue to pay 19 percent tax.
- The amount of SME payable R&D tax credits a business can claim will be capped at £20,000, plus three times its total PAYE and NIC liabilities.
- A ‘super-deduction’ will save businesses 25p in taxes for every pound they invest in equipment, which should add up to £25 billion over the two-year initiative.
This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people. First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances. And, third, in today’s Budget we begin the work of building our future economy.
Training and apprenticeships
- The apprenticeship hiring incentive in England will be extended until September 2021, with a higher payment of £3,000.
- £7 million will go towards a new “flexi-job” apprenticeship programme in England, allowing apprentices to work for more than one employer within a sector.
- A further £126 million will support an additional 40,000 traineeships across England, giving 16-24-year-olds the chance to access high-quality work placements during the 2021/22 academic year.
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- The contactless payment limit will be increased from £45 to £100.
- SMEs will be able to continue reclaiming up to two weeks of eligible Statutory Sick Pay (SSP) per employee from the government.
- The government will invest a total of £1 billion across 45 English towns as part of the Towns Fund, which nurtures Covid-19-recovery, as well as long-term economic and social regeneration.
- Communities across the UK will benefit from a new £150 million Community Ownership Fund to help protect important assets, such as pubs, theatres, shops and local sports clubs.
Other important aspects of the Budget 2021
Businesses operating in the property industry will also need to know about the changes to real estate law in the UK under the Budget 2021.
As part of the new provisions, the government will extend the Stamp Duty Land Tax cut in England and Northern Ireland until September to protect the sector and its jobs.
Plus, to further support the property market, a new mortgage guarantee scheme will help all homebuyers in the UK secure a mortgage up to £600,000 with a five-percent deposit.
Find out more about the Budget 2021
We’ve outlined the most important aspects of the Budget 2021 to provide an overview of the government’s plans for business owners and franchisees in the UK.
However, we recommend you take a look at the plan in full if you’re concerned about how the changes might affect your business. You can read a full run-down of every aspect of the Budget 2021 on the GOV.UK website.
To find out more about navigating the challenges of the Covid-19 crisis, take a look at our guide to the lockdown roadmap or our other recent articles. We publish data-driven business guides every day to help franchisees and franchisors alike make good decisions and build profitable businesses.
Alice Tuffery, Point Franchise ©