The chancellor of the exchequer has confirmed that the furlough scheme will be extended to the end of September 2021.
In his Budget announcement, 3 March, Rishi Sunak told the House of Commons that the furlough scheme will continue to pay 80% of peoples’ wages for hours not worked until 30 September. From July, employers will be expected to contribute 10% of this support themselves, rising to 20% in August and September.
Business rates and VAT
The chancellor confirmed that the 100% rates holiday would remain until the end of June, reducing to two-thirds for the remainder of the year. “For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses, with a lower cap for those who have been able to stay open,” he told the Commons.
On VAT, Sunak confirmed the 5% reduced rate of VAT will be extended for six months to 30 September followed by interim rate of 12.5% for another six months. The standard rate will not return until April 2022.
Corporation tax (which is a tax on profit) will rise to 25% in April 2023, which will impact larger, more profitable companies.
Small profits will stay at 19% for companies making profits under £50,000. Only businesses with profits over £250,000 will be taxed at a rate of 25%.
The chancellor made it clear that he wanted to see more investment, and announced details of a ‘super-deduction’, which is a tax break for firms that invest.
The scheme will allow firms to reduce their tax bill by 130% of what they spend on investment, the chancellor said.
He added that under the current rules, a business spending £10m on equipment gets a £2.6m tax reduction. Under this plan it would receive one worth up to £30m.
The move could boost investment by 10%, he said.
Further grants will be offered to the self-employed, with a fourth and fifth round of grants planned to be released before September.
Chancellor Sunak said those whose turnover has fallen by 30% or more will continue to receive an 80% grant, while those whose turnover has fallen by less than 30% will therefore have less need of taxpayer support and will receive a 30% grant.
Those who have now filed a 2020 tax return will now be able to claim, he added, meaning a further 600,000 people can claim support.
Support for events
The chancellor unveiled a £700m fund to help support arts, culture and sport, but it is not clear if any of this funding will support the business events sector. The fund will be available to help bids for international events, such as the FIFA World Cup 2030, but whether or not it can be used to attract international congresses remains unclear.
A statement released by the Business Visits and Events Partnership (BVEP) called for a clarity on the funding. “There’s a need to look more closely at the extent of these and other measures in so far as they apply to the Events Industry, including the additional funds allocated for the Cultural Recovery Fund,” the statement read.
“Previous announcements of similar measures have not always extended to event business and freelancers. Recent research shows delivering additional payments to businesses through local authorities has been slow and, in some cases, non-existent.
“Until the fine detail of the announcements becomes clear the Industry remains cautious in its appreciation of the impact on the measures in helping the industry sustain its activities until the planned reopening in May and June.”
The statement added that the events industry would be vital towards the UK’s economic recovery. “Events have a pivotal role to play in the UK’s economic revival through business events showcasing Britain’s trade and knowledge to the world and cultural events bringing communities together.”
Restart grants for hospitality and leisure businesses, up to £18,000, will also be made available, but eligibility for evens businesses is also unclear.
The chancellor also confirmed changes the apprenticeship scheme. The money will go towards offering employers double the incentive to take on an apprentice: currently they receive £2,000 for every apprentice taken on under the age of 25 and £1,500 for those over 25. The new scheme offers a £3,000 incentive to take on an apprentice of any age.