How will the 2021 British Spring Budget affect small businesses?

British Chancellor Rishi Sunak has outlined his three part plan towards economic recovery in his 2021 Spring Budget with a focus on supporting families and businesses through the pandemic, the investment-led recovery in the wake of lockdown and future changes aimed at strengthening public finances.

Unsurprisingly dominated by the repercussions from Covid-19, Sunak detailed several support plans targeting small businesses, which we’ll take you through here.

‘Restart grants’ for the high street

Aiming to help high street businesses reopen as lockdown eases, the government is making available a new £5 billion restart grant. Available to around 700,000 high street businesses, this one-off grant will be worth up to £18,000 with hospitality, accommodation, leisure, personal care and gym businesses in England all eligible. Hospitality grants will be allocated based on the value of the property.

Under the same scheme so called ‘non-essential’ businesses will also be eligible for a smaller £6,000 grant – that smaller amount reflecting the decision to allow them to open earlier. The restart grant will be paid directly to businesses by their local authorities from April, replacing the existing monthly grant.

While this grant is for English businesses only, devolved administrations in Scotland, Wales and Northern Ireland will also receive funding of £794 million through the Barnett formula.

For more information on this, see the Government Budget news release

‘Help to grow’ digital and management tools scheme

The help to grow scheme will support up to 130,000 small and medium sized businesses UK-wide with a £520 million fund that will help them “innovate, boost productivity and grow” in a bid to drive recovery. It will allow any small business to apply for a £5,000 grant towards paying for government-approved productivity software.

The scheme will be split into two streams. The first is Digital: an online service offering free advice on improving digital capabilities with access to half price vouchers for software that can be used to build customer relationships, sell online more efficiently and manage accounts and finances digitally. The second is Management: a 12-week programme with up to 30,000 places over three years that offers subsidised training to enhance leadership skills for things such as financial management and digital adoption. Participants will have to pay £750 to join with the other 90% of the cost covered by the government.

To find out more and register your interest, visit the Government Help to Grow site

‘Coronavirus job retention scheme’ – aka furlough – gets extended

Widely known as furlough, the coronavirus job retention scheme (CJRS) was first announced a year ago at the start of lockdown in 2020 but has now been extended by the government until 30 September 2021.

The scheme, designed to help protect jobs and livelihoods, will now be tapered over the coming months, with businesses expected to contribute 10% towards unworked staff hours in July rising to 20% in August and September.

For more information and to check if you’re eligible, visit the Governments Coronavirus job retention scheme page. Please note, claims for furlough days in February 2021 must be made by March 15th 2021.

‘Self-Employment Income Support Scheme’ extended for fourth and fifth grant

The Chancellor announced that with the extension of the Self-Employment Income Support Scheme (SEISS) for a fourth and fifth grant more than 600,000 people, many of whom became self-employed in 2019-20, may now be able to claim direct cash grants.

The fifth grant covering June, July and August will be more targeted, with those whose turnover has dropped more than 30% eligible for 80% of their average monthly profits and those who haven’t been as badly affected eligible for 30% of their average monthly profits.

SEISS however still hasn’t been extended to cover the freelancers, limited company directors and self-employed earning more than £50,000 in trading profits who have so far received no government support.

Find out more information on the SEISS and how to claim. Please note, the online claims service for the fourth grant will be available from late April 2021 until 31 May 2021.

New ‘recovery loan scheme' replaces existing Covid-19 loan schemes

The government will launch a new UK-wide recovery loan scheme to replace its existing Covid-19 loan scheme, which will stop taking new applications at the end of March. This new scheme is set to run until the end of 2021 and is designed to help businesses of all stages through the next stage of recovery. It promises to make available loans of between £25,001 and £10 million as well as asset and invoice finance between £1,000 and £10 million.

Find out more information on the new Government recovery loan scheme and if you’re eligible. Please note, the scheme will launch on 6th April 2021.

‘Super deduction tax break’ for investment in Britain’s future

Described as a “radical new super-deduction to cut companies’ tax bills if they invest in Britain’s future”, the government’s new tax break scheme will come into effect at the beginning of April. The bill will cut a company’s tax bill by 25p for every pound it invests in new plant and machinery equipment allowing them to reduce their taxable profits by 130% of the cost. The government states this will be worth £25 billion to companies over the two year period it’s in full effect.

Find out more information on the super deduction tax break.

‘Business rates holiday’ extended for three months

Alongside other extensions, the business rates holiday has also been extended for three more months. With it the government says 750,000 retail, hospitality and leisure properties in England won’t have to pay business fees for three months from the beginning of April when combined with Small Business Rates Relief. Further relief will also be available for the rest of the year.

Find out more information on the Business rates extension.

‘Reduced VAT scheme’ will continue for tourism and hospitality

Last but by no means least, Sunak announced the government will continue to support the 150,000 businesses and protect 2.4 million jobs across the tourism and hospitality sectors with a continued, albeit temporary, 5% reduced VAT rate up until 30 September. After this, the rate will rise to 12.5% for a further six months up until 31 March 2022 in an effort to ease businesses back towards the full VAT rate.

Find out more information on the update to the reduced VAT scheme


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This content was created on 22nd March 2021

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