The Chancellor has set out his ambition for “an investment-led recovery”, unveiling major tax incentives to encourage businesses to invest as part of plans to build the future economy.
Laid out in a three-part plan “to protect jobs and livelihoods” he said: “We are going long, extending our support well beyond the end of the roadmap to accommodate even the most cautious view about the time it might take to exit the restrictions”.
Super Reduction in Tax
He said his Budget was “fiscally responsible and business friendly” revealing what he claimed to be the “biggest business tax cut in modern British history” with the introduction of a super-reduction in tax bills when companies invest.
For the next two years, when companies invest they can reduce their tax bill by 130% of the cost.
From April 2023, profitable businesses will have to pay more corporation tax as it increases from 19% to 25%.
However, a measure aimed at small businesses with profits up to £50,000 will pay corporation tax at the current rate of 19%. A taper above the £50,000 will be introduced, the Chancellor claimed that only 10% of businesses will pay the new, higher rate.
UK Infrastructure Bank
“Our future depends a different economic geography”, he said, and targeted measures that were aimed at the Government’s levelling-up agenda included the placement of the UK Infrastructure Bank in Leeds.
The bank will invest across the UK in both public and private projects to finance the green Industrial Revolution, it will be backed by £12bn of initial funding.
Darlington will become home to 1,000 new Treasury jobs as part of a new campus that was announced in the 2020 Budget moving 22,000 civil servant jobs out of London.
The locations of eight new freeports was announced, which has been a flagship policy initiative of the Chancellor, placed around the country, including East Midlands Airport, the Humber, and Liverpool City Region, to boost investment.
£5bn of new restart grants are going to be made available. Retail businesses will receive up to £6,000 and other closed businesses, including gyms and personal care, will be eligible for up to £18,000.
New Loan Scheme
A new Government backed loan scheme will be launched and made available to businesses in all sectors and turnovers, with businesses able to apply for a loan of between £25,000 and £10m, the loans will be 80% backed by the Government.
The Chancellor extended the existing business rates holiday to June, with rates reduced by two-thirds after that.
Businesses in the hospitality sector will benefit from the 5% reduced rate of VAT until the end of September. An interim rate of 12.5% will then be introduced for the following six months before returning to 20% in April 2022.
The furlough scheme has also been extended until September 2021. Furloughed employees will receive 80% of salaries for unworked hours, although employers will soon have to make contributions from July.
SEISS (Self Employed Income Support Scheme)
Applicants for the SEISS will receive two more grant payments. However this will be based on whenever turnover has fallen by 30% or more, with lower grants to be paid if not.
The measures for the self-employed will be available to an extra 600,000 people due to an additional year’s tax returns been filed.
Take Over Your Local Pub
A £150m pot to help communities take over a local pub or sports club at threat of closure.
Join us tomorrow morning for our Budget Briefing where will we discuss in more detail the Budget 2021 from this Budget. Read more and register here.