Chancellor Rishi Sunak delivered his Budget speech yesterday to the House of Commons, unveiling £65 billion in support for businesses.
His Budget was aimed fairly and squarely at providing help for businesses and protecting jobs, with a package of loan schemes, help for the self-employed, an extension to the business rates holiday until the end of June and of the furlough scheme until September.
One small sting in the tail was when Sunak said that in a bid to claw back some of the £280bn spent on support measures to date, there would be an increase in corporation tax from April 2023 to 25% for companies with profits over £250,000. Businesses with profits of £50,000 or less would continue to pay at the old rate of 19%.
The Chancellor announced that the furlough scheme would be extended until September and that it would continue to pay 80% of unworked hours. But from July, employers will be asked to contribute 10%, rising to 20% in August and September.
The Budget also pledged further help for the self-employed with a fourth and fifth grant. Those whose turnover has fallen by 30% will get an 80% payment, with 30% for those with turnover shortfalls of less than 30%.
Committing a further £25bn in business loans, the Chancellor unveiled a new Restart Grant, starting from April, that would give retail businesses up to £6,000 per premises.
In addition to this, there will be a new Recovery Loan Scheme where businesses of any size can apply for loans of between £25,000 and £10 million until the end of 2021, on which the Government is providing an 80% guarantee to lenders.
The 100% business rates holiday for retail will be extended until the end of June, and for the remaining six months of the year business rates will be discounted by two-thirds.
The Budget also provided help to encourage firms to take on apprentices, doubling the provided incentive for doing so to £3,000.
Also promising a further stimulus to house building and buying, Sunak announced that the stamp duty £500,000 nil rate will continue until the end of June, decreasing to £250,000 until the end of September and then £125k from October 1. A new government guarantee scheme will encourage lenders provide 95% mortgages to house buyers.
The Chancellor also announced a new incentive for firms to spend on investment with the introduction of a ‘super deduction’ scheme that would allow them to reduce their tax bill by 130% of the amount invested for the next two years. The Sunak described it as “the biggest tax cut in the history of the UK”.
A pledge not to increase fuel duty will help business with logistics operations, while the promise of visa reforms opens up new possibilities for companies looking for skilled migrant workers from the EU.
To stimulate investment in UK building projects, the Chancellor announced the setting up of a UK Infrastructure Bank, which will have £12bn to invest in public and private infrastructure projects in the UK. The Chancellor also retained the £85,000 threshold for VAT registration.
Sunak’s final announcement was the setting up of eight Free Ports – special economic zones where it would be cheaper and simpler for businesses to build, with tax breaks to encourage construction and investment and infrastructure funding to improve public transport. They will be East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
Commenting on the Budget, Builders Merchants Federation chief executive John Newcomb said: “The Chancellor largely struck the right notes in announcing continued support for business. We were particularly pleased that the Chancellor sought to support smaller businesses by recognising the need for continued furlough support and business rates discounts. Similar extensions to self-employment grants will help small builders and other trades and ensure they are still in business to service the needs of homeowners.
“We also welcome the announcement of a new UK Infrastructure Bank and Super Deduction initiative. Clearly, the Chancellor is looking to the construction industry to help drive economic recovery.”
Christian Cubitt, head of UK government affairs at the Royal Institution of Chartered Surveyors, also welcomed the Chancellor’s measures to stimulate the housing market: “From getting thousands more young people on to the housing ladder to breaking ground on transformative projects backed by a new UK Infrastructure Bank, the billions invested represent a shot in the arm for the sector. Extending the business rates holiday is another positive step. When it comes to stamp duty, what we really need to see is a full and thorough review of all property taxation.”
Iain McKenzie, CEO of the Guild of Property Professionals, called the Budget “a double shot in the arm, with a boost from the stamp duty holiday extension and 95% mortgages”. He added: “Extending the stamp duty holiday should help avoid a sudden downturn in prices caused by the much-feared cliff-edge end.”
The Bathroom Manufacturers Association welcomed aspects of the Budget that it believes will boost economic confidence but said it “could have gone further”. CEO Tom Reynolds called the omission of a national retrofit strategy “disappointing”, adding that “reducing the energy and water demand of our 27 million homes is crucial to achieving our national environmental targets”.
On a positive note, Reynolds added: “The stamp duty relief and new mortgage guarantee is great news for the housing market and BMA members. A large proportion of bathroom improvement works takes place after home moves, so these announcements will keep buoyancy in the sector.”
British Retail Consortium (BRC) chief executive Helen Dickinson said: “This Budget does little for larger retailers – offering a string of cost increases with no respite in the short term. However, on the upcoming review, the Chancellor has clearly listened to the retail industry and we welcome his recognition that the overall burden of business rates must fall. It is vital that the burden is reduced for all retailers if it is to promote further investment in productivity growth and higher skilled, better paid jobs.”