Brighter business / What does the Spring Budget mean for your business?

What does the Spring Budget mean for your business?

16th March 2021

The Chancellor, Rishi Sunak, set out his Spring Budget on 3rd March.

The budget has three broad pillars:

  1. Supporting people throughout the COVID-19 crisis
  2. Fixing public finances
  3. Building towards the future economy.

It’s been a difficult 12 months since the Government declared the first national lockdown. This budget offers further financial support as the restrictions lift.

There’s also a clear focus on protecting jobs, with extensions announced for the furlough scheme and the introduction of new direct cash grants.

Read on to find out what these measures mean for your business.

Post-COVID financial support

The government has provided an unprecedented level of support over the last 12 months. Including those announced in the Spring Budget, total spending is at £407bn. This is much needed support for businesses.

The Coronavirus Job Retention Scheme - more widely called the furlough scheme - has been extended until the end of September. This will gradually taper; from July, employers will need to contribute 10% of the cost, then 20% from August.

Support for the self-employed also continues, with the Government set to extend the Coronavirus Self Employed Income Support Scheme (SEISS). You’ll be able to claim for up to 80% of three months’ average trading profits, up to £7500 in total.

The Budget’s also made available £5bn in restart grants, to help high street shops and hospitality businesses to reopen. Non-essential retailers can get up to £6000. Hospitality and leisure businesses will receive up to £18000.

Finally, a new Recovery Loan Scheme will replace the two existing ones (Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans), effective 6th April. Businesses will be able to apply for loans from £25,000 to £10m.

Taxes and rates breaks

Alongside generous financial support, the Business Rates holiday has been extended.

Until the end of June, there’s a 100% discount in place.

For the rest of the financial year, it’ll be cut by two-thirds (up to a value of £2m for closed businesses). For businesses able to open, there’ll be a slightly smaller cap.

The 5% VAT reduced rate’s been extended until 30th September. It will taper upwards from then, at an interim rate of 12.5% for six months. The standard 20% rate will be reintroduced in April 2022.

While Corporation Tax is set to increase to 25%, this won’t take place until April 2023. There are some protections, however. Businesses with profits of £50,000 or less will continue to pay the 19% rate.

Above the £50,000 threshold, a taper will apply between £50,000-£250,000, with companies above the £250,000 mark paying the full 25%.

Investing in business

Aside from the financial measures outlined above, the government has set aside funding for the apprenticeship scheme and for a new “Help to Grow” programme.

The “Help to Grow” scheme is a new programme which offers training in management and digital upskilling for SME businesses.

The management scheme offers executive development training over a 12-week course, delivered by business schools across the UK. Beginning in June, the scheme is 90% funded by government, with 30,000 places over three years.

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The digital scheme starts in October and reflects the digital shift that businesses have seized on during the pandemic.

Businesses will be able to get free, impartial advice to understand how technology can benefit them, boost their performance through a new online platform. Some eligible businesses will also benefit from a discount of up to 50% on the costs of approved software.

Details on the digital scheme will be announced later in the year.

You can find out more about the Help to Grow scheme here.

As well as the Help to Grow scheme, there’s new funding committed for apprenticeships. £126m will be provided for work placements and training for 16-24-year-olds in the 2021/22 academic year, as well as £7m from July for employers to set up or expand apprenticeships.

The incentive payments to businesses who hire apprentices has been doubled to £3000 each, too.

Conclusion

After a tumultuous year, government support has been necessary to ensure protection for jobs, livelihoods, and the economy.

The latest Budget announcement is positive news for businesses across the country, with fiscal support continuing until later in the year.

To find out more and access available support, visit: https://www.gov.uk/coronavirus/business-support

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