Chancellor of the Exchequer Rishi Sunak has set out a range of new measures to support the UK’s economy during the pandemic, as well as supporting an economic recovery as lockdown restrictions are gradually lifted.
Please see below for an overview of announcements most relevant to member businesses:
Covid-19 financial support for businesses
Business Rates Relief extended
The current, 100% business rates holiday will continue until 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
NFDA has previously highlighted that the Business Rates Holiday represented one of the most welcome forms of financial support offered by the Government during the pandemic.
Following our requests for a business rates holiday extension submitted ahead of the budget, today’s announcement is positive, as it will continue to support retailers while the economy reopens, and we come out of the pandemic.
‘Restart grant’
For non-essential retailers in England, businesses can claim up to £6,000 per premises. For hospitality, this rises to up to £18,000 per premises.
‘Recovery loan scheme’
From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
Further information and eligibility: https://www.gov.uk/guidance/recovery-loan-scheme
Employment and training
Furlough scheme extended until September
The Coronavirus Job Retention Scheme will run until the end of September, with furloughed employees continuing to receive 80% of salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June.
From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.
During the pandemic, nearly all dealers accessed the Coronavirus Job Retention Scheme, especially when only key staff working in essential maintenance and repair could continue to work. Currently, as showrooms are due to remain shut in March, there is a proportion of dealers still benefiting from the scheme. NFDA had called on the Government to ensure that the capability to furlough staff could be retained while restrictions remain in place.
It is encouraging that the furlough scheme has been extended, as it will allow dealers to retain staff while levels of demand remain subdued due to the current restrictions. However, we have pointed out that dealers are looking forward to reopening and returning to full operations to be able to meet their customers’ needs.
Payments for hiring apprentices
Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.
These incentives will be well received by the automotive industry, a sector which is committed to creating new opportunities, investing in the workforce of the future and upskilling current staff to meet the requirement for new skills.
‘Help to grow’ – Management and Digital
The Government will open a UK-wide programme, to launch in Autumn, aimed at SMEs. The programme will provide subsidised MBA-style training as well as digital skills courses.
Tax and investment
Corporation tax rate to reach 25%
The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate. In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023.
Due to the significant challenges facing our economy, the announcement about the rise in corporation tax was not unexpected. However, the fact that the increase will not come into effect until 2023 will give businesses some time to start to recover from the current disruption. The ‘super deduction’ tax relief will partly offset this increase especially as retailers need to make further investments into their sites to meet changing demand.
Super-deduction
From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.
Fuel Duty frozen
The rate of fuel duty will be frozen for 2021-22, the eleventh consecutive freeze.
The decision to freeze the fuel duty for another year will benefit motorists and support personal mobility as more people return to work and seek to avoid public transport, giving greater importance to car ownership.
VED and levy rates for HGVs
The Government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2021.
For HGVs, the Government will freeze HGV VED for 2021-22 and will suspend the HGV Levy for another 12 months from August 2021.
Business Rates Repayments
The government will legislate to ensure that the business rates relief repayments that have been made by certain businesses are deductible for corporation tax and income tax purposes.
Extended loss carry-back
For UK businesses that have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from one year to three years.
UK Infrastructure Bank
A new UK Infrastructure Bank to provide financing support to private sector and local authority infrastructure projects across the UK, to help meet government objectives on climate change and regional economic growth. The institution will begin operating in an interim form later in spring 2021.
As retailers continue to play a crucial role during the transition to zero emission vehicles, we will be looking at how retailers can benefit from this as they continue to make significant investments into their sites.
Personal allowance
Rates of income tax, national insurance and personal tax thresholds will remain frozen. Following months of lockdown, it is important to support consumers and instil confidence; these measures will help the economy bounce back and encourage people back into the marketplace.
NFDA will be looking closely at the measures announced and the impact these will have on our sector.
We will keep our members updated.
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