BUDGET – Winners and Losers in UK Business
A year ago, Rishi Sunak delivered his first Budget just as the Covid-19 began to take hold. While his £30 billion package sounded significant, it’s a sum that has paled into insignificance over the last 12 months as the chancellor has spent £280 billion shoring up the UK economy.
So, who are the winners and losers of the 2021 Budget?
WINNERS
Retail, Leisure and Hospitality Businesses: The chancellor announced £5 billion in government grants to businesses in these sectors. Non-essential retail businesses will receive grants of up to £6,000 per premises, while hospitality and leisure businesses will receive grants of up to £18,000. Sunak also confirmed an extension to the temporary 100% business rates relief for hospitality, retail, and leisure until the end of June. He also extended the temporary VAT reduction in these sectors from 20% to 5% until 30 September.
Businesses with Staff on Furlough: Extended until the end of September 2021. The government will support towards the wages for workers who have been put on leave due to the pandemic (up to a maximum of £2,500 a month) until the end of Sep 2021.
Self-Employed Workers: The fourth Self-Employed Income Support Scheme (SEISS) grant for February, March, and April 2021 will cover 80% of monthly profits up to a maximum of £2,500 a month. A fifth grant, covering May, June and July 2021 will also be available.
Businesses looking to Invest: After announcing a hike in business tax rates (see below), the chancellor announced what he called the “biggest business tax cut in modern British history”. A new “Super Deduction” will come into force for two years. This means that, when companies invest, they can reduce their tax bill by 130% of the cost of the investment
LOSERS
Large Businesses: From April 2023, the Corporation Tax rate will rise to 25% ( will only apply to businesses who make profits of £250,000 or more. ). Small businesses – those with profits less than £50,000 – will benefit from a “small profits rate” of 19%. This means 1.4 million businesses will be unaffected and pay the same rate. There will be a taper for profits above £50,000 up to £250,000.
Income Tax payers: While the chancellor announced no Income Tax, VAT or National Insurance rises, the decision to freeze the Personal Allowance at £12,570 and the higher-rate tax threshold at £50,270 from 2021/22 to 2026 equates to, essentially, stealth taxes.
Overall, Business leaders have welcomed the Budget however they remain cautious as the impact of the pandemic will be felt for many years to come.
Kind regards
Amarjit
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