Pubs, restaurants and other non-essential retail businesses have been given further help in the Budget.
Chancellor Rishi Sunak confirmed in his Budget on March 3rd that the business rates holiday and the VAT cut will be extended
The 100% business rates holiday will be extended into the first three months of this financial year, through to the end of June, and for the remaining nine months will be discounted by two-thirds up to a value of £2m, with a lower cap for businesses who have been able to stay open.
And for hospitality, the 5% reduced rate of VAT will be extended for six months to 30 September with an interim rate of 12.5% for another six months after that, returning to 20% in April 2022.
The government is doubling incentive payments to businesses to £3,000 for all new apprentice hires of any age, alongside investing £126m in traineeships.
Bounceback and Coronavirus Business Interruption Loan schemes will be replaced with a new recovery loan scheme. Businesses of any size can apply for loans from £25,000 up to £10m through to the end of this year, and the government will provide a guarantee to lenders of up to 80%.
Planned increases in duties for spirits, wine, cider and beer have also been cancelled for the second year in a row.
Measures include extending the VAT cut for the hospitality sector, seen during the Eat Out to Help Out scheme.
Gyms and other non-essential retail premises in England will also see the year-long business rates holiday extended for another three months.
They will now be exempt until the end of June, followed by a further six-month period where rates will be discounted to one third of the normal charge, up to a maximum of £2m for closed businesses.
The furlough scheme has been extended until the end of September
Rishi Sunak said the scheme – which pays 80% of employees’ wages for the hours they cannot work in the pandemic – would help millions through “the challenging months ahead”. Employers will be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September, as the economy reopens.
Government support for self-employed people has also been extended until September. A fourth grant under the Self-Employment Income Support Scheme (SEISS) scheme will run from February until April, covering up to 80% of three months’ trading profits up to £7,500.
There will be a fifth grant from May to September. People whose turnover has fallen by 30% or more will get the 80% grant, but self-employed people whose turnover has fallen by less than 30% will get a 30% grant.
The government is widening access to grants, meaning some 600,000 more self-employed people will be eligible. People who filed their tax returns for 2019-20 by midnight on Tuesday are now eligible.
The UK’s first infrastructure bank, which will channel billions of pounds into big projects and help tackle climate change, will be based in Leeds.
Making the announcement in his Budget, Chancellor Rishi Sunak said it would support regional economic growth and help get rid of the North-South divide.
The bank would benefit from Leeds’ position as an established financial hub, the government said.
MPs said it was a “welcome shot in the arm” for the whole region.
Mr Sunak said he would task the bank with delivering “world-class infrastructure” by investing in sectors such as renewable energy, carbon capture, storage and transportation, and providing low-rate loans to mayors and councils to fund projects.
He said the institution’s objectives were to help deliver the UK’s commitment to reach “net zero carbon” by 2050 and to support regional and local economic growth.
KEY POINTS AT-A-GLANCE
- Furlough to be extended until the end of September
- Government to continue paying 80% of employees’ wages for hours they cannot work
- Employers to be asked to contribute 10% in July and 20% in August and September
- Support for the self-employed also to be extended until September
- 600,000 more self-employed people will be eligible for help as access to grants is widened
- £20 weekly uplift in Universal Credit worth £1,000 a year to be extended for another six months
- Working Tax Credit claimants will get £500 one-off payment
- Minimum wage to increase to £8.91 an hour from April
State of the economy and public finances
- UK economy shrank by 10% in 2020
- Economy forecast to rebound in 2021, with predicted annual growth of 4% this year
- Economy forecast to return to pre-Covid levels by middle of 2022, with growth of 7.3% next year
- 700,000 people have lost their jobs since pandemic began
- Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted
- UK to borrow a peacetime record of £355bn this year.
- Borrowing to total £234bn in 2021-22
- No changes to rates of income tax, national insurance or VAT
- Tax-free personal allowance to be frozen at £12,570 from April 2021 levels to 2026
- Higher rate income tax threshold to be frozen at £50,270 from April 2021 levels to 2026
- Corporation tax on company profits above £250,000 to rise from 19% to 25% in April 2023
- Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
- Stamp duty holiday on house purchases in England and Northern Ireland extended to 30 June
- No tax charged on sales of less than £500,000
- Inheritance tax thresholds, pensions life time allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-26
Business, digital and science
- Tax breaks for firms to “unlock” £20bn worth of business investment
- Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
- Incentives for firms to take on apprentices to rise to £3,000 and £126m for traineeships
- Lower VAT rate for hospitality firms to be maintained at 5% rate until September
- Interim 12.5% rate will then apply for the following six months
- Business rates holiday for firms in England to continue until June with 75% discount after that
- £5bn in Restart grants for shops and other businesses in England forced to close
- £6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
- New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
- Contactless payment limit will rise to £100 later this year
The arts and sport
- Nearly £400m to help arts venues in England, including museums and galleries, re-open
- £300m recovery package for professional sport and £25m for grassroots football
- £1.2m to help stage delayed Women’s Euros football tournament in England in 2022
Environment, transport, infrastructure and housing
- New UK Infrastructure Bank to be set up in Leeds
- It will have £12bn in capital, with aim of funding £40bn worth of public and private projects
- £15bn in green bonds, including for retail investors, to help finance the transition to net zero by 2050
Alcohol, tobacco and fuel
- All alcohol duties to be frozen for second year running
- No extra tax on spirits, wine, cider or beer
- Fuel duty to be frozen for eleventh consecutive year
- Tobacco duties to rise by inflation plus 2%
Health and education
- £1.65bn to support the UK’s vaccination rollout and £50m to boost the UK’s vaccine testing capability
- £19m for domestic violence programmes, funding network of respite rooms for homeless women
- £40m of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee
- £10m to support armed forces veterans with mental health needs