Budget 2021: How will it impact my business?
There has been no doubt that the last 12 months have been difficult for the UK, with the Chancellor announcing in today’s budget that the economy shrunk by 10% over the last 12 months and UK borrowing is at a high not seen since the war.
Therefore it comes as no surprise that the budget was again dominated by Coronavirus and the road to recovery, with emphasis on funding which continues to support businesses throughout the UK.
Support and Grants
The next 12 months look promising for businesses as a whole, as more funding support is offered to help SMEs on the road to recovery, with direct cash support to businesses reaching £25bn.
A £5bn restart grant will help many businesses across the UK, with non-essential retail able to claim up to £6,000 per property; and accommodation, leisure, personal care and gym business up to £18,000.
The Government bounce back loan and Coronavirus business interruption loan scheme (CBILS) have provided a lifeline to many businesses, and with these coming to an end there has been concern from SMEs. In response to this, the Treasury is launching a new loan scheme running until the end of the year, which allows businesses to borrow between £25,000 and £10m.
It has also been announced that the furlough scheme will be extended until the end of September. Employees will continue to receive 80% of their wages until the scheme ends, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out. The extension of the scheme will see many SMEs able to keep employees on until they are able to operate as usual, providing a lifeline for both business and staff.
Hospitality and Leisure
There is absolutely no denying that hospitality and leisure were two of the hardest hit industries by the pandemic and the restrictions put in place to help control the spread. For these industries, Business As Usual came to a halt last March and has yet to be properly resumed since, with many having to adapt both the services they provide and their business premises to adhere to rules and guidelines.
For hospitality and leisure businesses, the budget comes as a welcome helping hand, with no business rates being required to be paid for three months, then a discount of two-thirds for the remaining nine months of the year. They are also able to claim up to £18,000 as part of the Governments restart grant.
VAT has also been cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022 and alcohol duties will be frozen across the board.
Help to grow
2020 highlighted the need for innovation, and whilst many adapted and did so quickly, there were many small businesses who were unable to survive. There is now greater need for small business leaders to develop their strategic skills such as financial management, innovation and digital adoption.
In order to facilitate this, the Chancellor, Rishi Sunak, has unveiled a scheme that will offer the leaders of up to 130,000 SMEs across the UK a digital and management boost.
The scheme is an Executive Development programme that could help improve business performance and growth potential. By the end of the programme participants will develop a tailored business growth plan to lead their business to its full potential.
Although it seems a long road to normality for SMEs, today’s budget gave a glimmer of hope that recovery is in sight.