What the Spring Budget means for Warwickshire businesses...
The March 2021 Budget arrived at a uniquely turbulent time for the country's business community - amid extensive economic fallout from the coronavirus pandemic and following the UK’s exit from the European Union on January 1.
The budget attached some focus to helping businesses through the pandemic and supporting the UK's long-term economic recovery. Sunny Parekh, senior economist at Warwickshire County Council, studied every one of its 40,000 words and sifted out the info most pertinent to businesses in our county.
The Budget on March 3 was delivered after one of the most challenging year for businesses on record.
In 2020, due to the coronavirus pandemic and subsequent restrictions, the UK economy shrank by 10% the biggest fall since 1709. However, the Office of Budget Responsibility predicts that the economy will rebound in 2021, with projected annual growth of 4% this year as the mass rollout of the vaccine allows restrictions to be eased.
The UK economy is forecasted to return to pre-pandemic levels by middle of 2022, with growth of 7.3% next year. Unemployment is expected to peak at 6.5% next year, lower than 11.9% previously predicted
However, much work remains ahead to build the recovery. Locally, Warwickshire County Council plans to create a £140m fund to stimulate the county’s economy. This will create jobs, support local businesses and bring investment into the county with a further £160m investment in new housing, regeneration and creation of business premises.
Businesses in Warwickshire have shown amazing resilience, adaptability and enterprise amidst this very tough climate - and the budget included measures from Central Government designed to help them stabilise and grow again in 2021.
Key announcements from the budget that will impact upon Warwickshire’s local businesses & economic landscape are:
- £5bn restart grant fund for businesses to help companies get going after lockdown.
- Total direct cash support to businesses has reached £25bn.
- Government-backed bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS) will end, but the Treasury will launch a new loan scheme to run until the end of the year. Loans can be between £25,000 and £10m.
- Hospitality and leisure businesses will pay no business rates for three months, then rates will be discounted for the remaining nine months of the year by two-thirds, in a £6bn tax cut.
- The 5% reduced rate of VAT will be extended until the end of September. Then it will be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022.
- £6,000 per premises for non-essential retail outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
- Contactless payment limit will rise to £100 later this year
- Tax breaks for firms to "unlock" £20bn worth of business investment
- New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
- Furlough to be extended until the end of September 2021
- Government to continue paying 80% of employees' wages for hours they cannot work
- Employers to be asked to contribute 10% in July and 20% in August and September
- Support for the self-employed also to be extended until September
- 600,000 more self-employed people will be eligible for help as access to grants is widened
- £20 uplift in Universal Credit, worth £1,000 a year, to be extended for another six months
- Working Tax Credit claimants will get a £500 one-off payment
- The minimum wage to increase to £8.91 an hour from April
- Corporation tax on company profits to rise from 19% to 25% in April 2023
- Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026
- Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
- Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
Environment, transport, infrastructure and housing
- £15bn in green bonds, including for retail investors, to help finance the transition to net zero by 2050
- Stamp duty holiday on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000
Nations and regions
- £1bn Towns Fund to promote regeneration in 45 English towns (including Nuneaton).
- £150m for community groups to take over pubs at risk of closure
(Sources, Office of Budget Responsibility, BBC News and The Guardian)