Coronavirus Job Retention Scheme (CJRS)
This was a cautiously optimistic budget heavily focused on recovery and growth – Mr Sunak vowed to use his ‘full measure of fiscal fire power’ to protect people and jobs.
To date, according to the government, it has helped 1.3 million employers to pay the wages of 11.2 million jobs, at a cost of £53.8 billion.
Part of that protection sees the Coronavirus Job Retention Scheme (CJRS) until the end of September 2021 at a further cost of £6.945m.
Furloughed or part furloughed employees will continue to receive 80% of their current salary for hours not worked. As at present, employers will not be required to make a contribution beyond National Insurance contributions (NICs) and pensions required throughout April, May and June, but from July, employers will be required to make a contribution of 10% of the cost of the unworked hours rising to 20% in August and September.
The Recovery Loan Scheme & Restart Grants
Mr Sunak’s budget continued along the theme of giving rather than taking away, with further stimulus for business growth and economic recovery.
The government is launching the new Recovery Loan Scheme from 6 April 2021, open to UK businesses of any size, with loans available between £25,000 and £10 million.
Mr Sunak presented this scheme as an opportunity for businesses to access additional capital in order to expand and invest. However, many small businesses will already have borrowed heavily under the previous schemes simply in order to survive. While many businesses are reporting that business looks set to boom once they are able to reopen, there will inevitably be those that still struggle to survive especially burdened with heavy debt that will take years to repay.
Some of those businesses that have inevitably struggled the most are those in the non-essential retail, hospitality, accommodation, leisure, personal care and gym sectors.
For those sectors, the government will also provide, what will undoubtedly be welcome ‘Restart Grants’ in England, of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses, to assist them in reopening over the coming months.
The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated.
Business Rates Relief (England only)
In March 2020 the government announced a business rates holiday for eligible retail, hospitality and leisure properties for 12 months due to the, at that point in time, potential impact of the pandemic. According to the government, to date, an estimated 350,000 properties have benefitted from over £10 billion of support.
The government faced significant pressure from businesses and the high street to continue this support and so it was of little surprise that Mr Sunak’s ‘business friendly’ budget included the following measures:
- Continuation of 100% business rates relief for eligible retail, hospitality and leisure properties in England with from 1 April 2021 to 30 June 2021.
- From July onwards, those same eligible businesses will receive 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
- Nurseries will also qualify for relief.
- Full Business Rates relief in Freeport tax sites in England, once designated.
- The government has also frozen the business rates multiplier in England for 2021-22 with effect from 1 April 2021, saving businesses around £600 million over the next five years.
When combined with Small Business Rates Relief, the government claims that this means 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April 2021, with the vast majority of eligible Businesses receiving 75% relief across the year.
SEISS Grants 4 & 5
The fourth SEISS grant will be worth 80% of three months’ average monthly trading profits, much like the three preceding grants. The grant is a single payment, capped at £7,500, covering February 2021 until April 2021 and can be claimed from late April. The main difference with this grant is that claimants must have filed their 2019/20 return by midnight on 2 March 2021, which means that many people who were not previously eligible will now be able to claim the grant, including those who began their self-employment in the tax year to 5 April 2020. All other eligibility criteria remain the same as the prior three grants and we understand that further details are to follow.
The fifth and final SEISS grant will be available over the summer but the value will be determined by a ‘turnover test’ to ensure that those who require the support most will get the higher grants. Where turnover has reduced by 30% or more, people will be able to claim the full grant of 80% of three months’ average monthly trading profits, capped at £7,500. However, where people have turnover that has fallen by less than 30%, they will only be entitled to a 30% grant of three months’ average monthly trading profits, capped at £2,850. The final grant will cover May 2021 until July 2021, with the grant available to be claimed from the end of July. Again, further details will be announced in due course.
The inclusion of those who became self-employed in the 2019/20 tax year is much welcomed, with an estimated 600,000 more people becoming entitled to the grants, however this covers just 20% of those who have not been eligible for support so far.
If you have any questions for our Tax experts as a result of this Budget, please contact us on 01242 776000 or firstname.lastname@example.org.