As Rishi Sunak stepped up to announce this years Budget in the House of Commons, he ensured us that the Government will continue to do “whatever it takes” to support both British people and businesses in the wake of the pandemic. The Chancellor of the Exchequer stated that whilst the Government’s response to Coronavirus is working, repairing the long-term damage of the past year will “take time”. However on a more positive note, it is expected that the economy will return to pre-COVID levels by the middle of next year, six months earlier than was expected.
In what could be one of the most important Budgets in recent history, the Chancellor announced various new measures which hopefully will support businesses and employees throughout the end of the pandemic and its aftermath. He has also revealed plans to support the recovery of the UK economy and tax-raising to further aid public finances.
“Protecting, creating and supporting jobs remains my highest priority”
After announcing the extension of furlough ahead of his speech, the Chancellor confirmed that the scheme will carry on until the end of September. The government will continue to pay 80% of employees salaries up until July, when employers will be asked to put in 20% followed by 30% in August. Self-employment income support will also be extended, with a further 600,000 more people being made eligible. This comes after the BBC reported the success of the previous extension of the scheme, with the fewest number of firms planning job cuts in January since the pandemic began.
With unemployment expected to peak at 6.5%, the £20 a week increase to Universal Credit has also been extended for a further six months. There will also be a huge increase in incentive payments for the hiring of new apprentices, which are being doubled to £3,000 and £126bn is to be invested in an attempt to triple the number of traineeships.
“This Budget also protects businesses”
Sunak has also announced plans to help hard hit businesses open up again post-pandemic. The Chancellor has confirmed £5bn worth of new grants will be available to businesses. With up to £6,000 available to non-essential retail and up to £18,000 for pubs, restaurants, gyms and personal care businesses set to reopen later in the year. He also announced a new recovery loan scheme, 80% guaranteed by the Government, to replace bounce-back and other Coronavirus loans for businesses.
Along with this he has also confirmed the extension of the reduced rate of 5% VAT for the hospitality and tourism sectors, two industries that have hugely fallen victim to the events of the previous year, this will last up until the end of September, only going up to 12.5% following that, it will return to 20% next April. As well as the extension of business rates holiday for retail, hospitality and leisure sectors to the end of June. For the remaining nine months of the fiscal year they will be discounted by up to two thirds.
“It is fair and necessary to ask them to contribute to our recovery”
Sunak stated today that the Government is “providing businesses with over £100bn of support to get through this pandemic” and therefore is was “fair and necessary” to expect them to contribute back to our recovery in the next few years. He announced that in April 2023, Corporation tax is to increase to 25% however reassured that it will still be the lowest rate in the G7. Despite this, companies with profits of £50,000 or less will still only be liable to pay the current 19% rate whilst only those with profits of £250,000 or more will be expected to pay the full 20%. Companies will also be able to offset their losses against their tax bills going back to up to three years. This will allow them to claim refunds of up to £760,000.
“A policy on a scale we’ve never done before”
In the final part of his speech, Rishi Sunak announced eight new post-Brexit freeports around the country, one of which is in our very own Liverpool. He said that these freeports would be key in creating jobs and making it easier to do business. Freeports are special zones that do not adhere to the same tax rules as the rest of the nation. This means companies can import products into these freeports without paying the standard UK tax on that product. Freeports are something that the Chancellor has long been passionate about, arguing that they could create up to 80,000 jobs and be a way to boost the economy of the North.