Budget summary: what it means for businesses

In this week’s budget, it was essential that we heard announcements that supported the economic recovery of town centres and protected the jobs, organisations and businesses that operate within them. For many sectors, the route out of lockdown and into recovering from the shock of Covid-19 has not yet begun and sustained support for at least the rest of the year was critical.

It was a budget heavily focused on businesses and as we have previously reported, we have been part of a wider sector representation lobbying for the extension of the business rates holiday, the extension of furlough and the extension of VAT reduction scheme. These measures were announced today which is positive. Funds for cultural and sporting organisations to reopen were also confirmed; this is also good news for towns and cities like Kingston where cultural institutions are so important to the vibrancy and offer of our place.

The budget is framed in the context of more encouraging reports from the OBR, which states the economy will return to pre-pandemic levels by mid-2022. For many consumer facing businesses, the budget also relies on consumer confidence bouncing back and pent up demand. The Kingston First team are planning for the town’s reopening to support this and welcome Kingston consumers and employees back this Spring and Summer.

We are concerned that there was no reference to the much needed root and branch review of business rates and reference to online taxation so critical for the future vibrancy of town centres. We also note that charity and third-sector organisations, providing critical community services, were not mentioned.

We will be digesting the announcement and working closely with Kingston Council and partners to keep our businesses informed on relevant details and discussions, including how and when grant funding will be paid. We are also planning a post-Budget members webinar with our MP, Sir Ed Davey MP and Kingston Council Leader, Cllr Caroline Kerr. Read on below for a summary of the Budget announcements.

Warm regards,

Kirsten Henly
Chief Executive

Summary of announcements

New £5bn restart grant scheme to support businesses

New restart grants to support all businesses reopening will be available from April.

• Non-essential retail will be eligible for grants up to £6,000

• Leisure and hospitality including personal care and gyms will be eligible for grants up to £18,000.

We expect these to be distributed through the local authority and will keep you updated with the details of how these will be administered.

Recovery loan scheme

These will replace the Bounce Back and coronavirus loan scheme and will launch on 6 April until 31 December. Loans of between £25,001 and £10 million will be made available to businesses of any size. Details of how you can apply have not yet been published. We will keep you updated when further details are announced. To find out more information, click here.

Business rates and VAT

For retail, leisure and hospitality venues, the 100% business rates holiday will be extended until the end of June 2021. From July -March 2021 business rates will be discounted by two thirds. This amounts to a 75% discount on business rates for eligible businesses during 2021/22.

The 5% reduced rate of VAT will be extended for six months until 30 September 2021. From October there will be an interim rate of 12.5% for another 6 months, returning to standard rate of 20% in April 2022.

Extended Furlough Scheme

The furlough scheme will be extended until the end of September 2021. The scheme covers up to 80% of an employee’s salary for the hours they can’t work, up to a maximum of £2,500 per month. Businesses will be asked to contribute towards the costs of furlough: 10 percent in July and 20 percent in August and September.

Support for self-employed extended until end of September

• Self-employed workers will be able to claim a fourth grant from the Self-Employed Income Support Scheme. The fourth grant will cover lost earnings through February, March and April. Eligible self-employed workers who have lost income due to the virus will be able to claim 80% of earnings each month up to a cap of £2,500.

• A fifth grant will also be available.

• The newly self-employed in the 2019-20 financial year will also be able to receive payments.

National living wage increase

The national living wage will rise to £8.91 per hour.

Corporation tax

Corporation tax on profits will rise from 19% to 25% in April 2023.  Businesses with profits of £250,000 or more will be expected to pay the full rate. A new rate will be introduced for businesses with profits under £50,000 meaning those businesses will pay a 19% corporation tax rate.

Apprentices and new help to grow training schemes for businesses

Business will be given £3,000 incentive to recruit apprentices. Starting in the autumn, new programmes will be introduced to cover management training and digital skills to support small businesses.

Cultural recovery fund

An extra £300 million has been announced to support music venues, theatres and cinemas and other cultural organisations.