2021 Spring Budget: Norwich BID reacts
It is clear our businesses needed support from the Chancellor’s new Spring Budget. Wednesday’s announcement has brought some positives, but will it be enough for our business community? We will be interrogating the package in greater detail to completely understand its full impact.
We see the extension of furlough, Business Rates relief and VAT cut as a great relief to many; we know that these 3 measures have been high on the list of demands for organisations locally and nationally.
In many of our discussions with Norwich businesses, the need for upskilling and digital training has been emphasised too, so I’m pleased that the new ‘Help to Grow’ scheme will address some of the challenges our SMEs are facing. The proposed tax breaks should allow businesses to support their re-opening, and hopefully adapt their organisations to the new trading environments post CoVid19.
The corporation tax was not what we, and many others, were expecting: we had hoped for the taxation to act as a fairer reflection of the new trading environment, particularly regarding the boost to the online economy. We are relieved that the new taxation from 2023 will not impact smaller businesses, and believe that the super-deduction investment tax cut will help offset the blow for larger businesses.
What remains to be seen is the impact of business rates repayment, once the business rates holiday has ended. We’ll be keeping a close eye on that, as well as continuing to push for a comprehensive review of business rates in 2022, in order to better reflect the current trading environment.
Key Points for Businesses
- Extension of furlough till September, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out.
- VAT reduction of 5% for hospitality, accommodation and attractions extended until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.
- Business rate relief extended for hospitality and leisure businesses until June, then rates will be discounted by two-thirds for remainder of the year.
- £5bn restart package for retail, hospitality and leisure: properties with a rateable value of £15k or under given an £8k grant; properties with a rateable value between £15k and £51k will receive £12k, while properties with a rateable value of £51k or over will get £18k.
- Corporation tax to increase from 19% to 25% in 2023. Businesses with profits of £50,000 or less, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
- Duties on alcohol and fuel frozen.
- Investment tax deduction: from April 2021, the new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment.
- Digital training: the Help to Grow scheme to offer up to 130,000 companies across the UK the chance to upskill digital and management.