Today’s Budget announcement impacts pubs/hospitality directly but also has some indirect support for anyone running a business.
The key takeaways from the Budget are:
Growth is starting from a low base and is still expected to be 3% below where it should be in 5 years’ time – i.e. the pandemic has a long-lasting effect on the economy.
Jobs the Government confirms the extension of the furlough scheme until the end of September 2021 Employees will continue to receive 80% of their wages BUT firms will be asked to contribute 10% in July rising to 20% in August and September as the scheme ends. The self-employment income support scheme has also been extended, the latest grant will cover February to April and is worth 80% of average trading profits up to £7,500.
Business support as the government-backed bounce back loans (BBL) and CBILS come to an end, the Treasury is launching a new scheme with an 80% guarantee on loans between £25,000 and £10m. Hospitality and leisure businesses pay no business rates for three months, BUT rates will be then be discounted for the remaining nine months of the year by two-thirds i.e. Pubs will have to pay 1/3 of business rates from July onwards. VAT the 5% rate of VAT will be extended until the end of September BUT it will be increased to 12.5% for six months, before returning to the standard rate in April 2022.
Corporation tax in April 2023, the rate of corporation tax will increase to 25% BUT businesses will only be impacted if they are making profits, and the change will only come in once the OBR forecasts are met. Only businesses with profits of more than £250,000 will be taxed at the full 25% rate. Companies with profits of less than £50,000 will remain at 19%. There is a 130% super-deduction on tax for investments i.e. this means companies can cut their taxes by up to 25p for every pound they invest.
Duty Alcohol duties will be frozen for the second year in a row – note this is not usually passed onto pubs as it’s a production tax and some brewers have already announced price rises.
Community Ownership Fund – money to help buy pubs for details see HERE
Further details can be found on the Treasury site HERE