Chancellor Rishi Sunak has extended the business rates holiday for a further three months and will offer non-essential retailers new recovery grants of up to £6,000 per store.
In the Budget today, Sunak unveiled further tax cuts and relief programmes for retailers and other high street businesses forced to close due to the pandemic.
He said the government would extend the 100% business rates holiday for all businesses up to the end of June. From then, for the remainder of 2021, Sunak said that business rates would continue to be discounted by two-thirds, which he said was a further £6bn tax cut for business.
“For the remaining nine months of the year, business rates will still be discounted by two-thirds, up to a value of £2m for closed businesses, with a lower cap for those who have been able to stay open,” he said.
So far Sainsbury’s, Asda, Morrisons, Tesco and Aldi have all said they will waive the three month holiday extension and will continue to pay full business rates for the remainder of the year.
Sunak also unveiled a replacement for the current coronavirus business loan schemes would be replaced by new “restart grants” beginning in April with grants of up to £6,000 per premise for non-essential retailers and up to £18,000 for hospitality businesses forced to close due to Covid-19.
The chancellor said the grants would “help businesses reopen and get going again” and added “£5bn of new grants, on top of the £20bn we’ve already provided, taking our total direct cash support to business to £25bn”.
Sunak announced the new measures on top of other schemes already trailed such as extending the furlough scheme and upping the contactless payment limit to £100 per transaction.
The temporary £20 increase in universal credit unveiled last year was also extended until the end of September.
Sunak said the support package unveiled today included a further £65bn of support schemes.
“Taking into account the significant support announced at Spending Review 2020, this means our total Covid support package, this year and next, is £352bn,” he said, adding “total fiscal support over this year and next amounts to £407bn”.
To help pay for this, Sunak said corporation tax would rise to 25% of profits in April 2023.
He also said he would create a small profits rate to ensure only businesses with profits of over £250,000 will be taxed at the 25% rate. Businesses with profits under £50,000 would continue to pay the current 19% rate.
“That means only 10% of all companies will pay the full higher rate,” he added.
The chancellor also announced a “super deduction” to encourage cash-rich businesses to invest that money back into the economy rather than hoarding it or returning it to stakeholders.
Sunak said businesses would be able to offset 130% of investment costs against tax for the next two years, which he called “the biggest business tax cut in modern British history”.
He also confirmed a freeze on all alcohol duties.
The chancellor said the pandemic had “fundamentally altered” people’s lives and had done “profound damage” to the economy that would take “a long time to recover”.
He said more than 700,000 jobs had been lost and the economy had shrunk by 10%, the largest fall in 300 years.
However, Sunak said the Office of Budget Responsibility’s (OBR) forecast showed the economy recovering to pre-pandemic levels by the middle of next year, but it would be 3% smaller than it would have been in the next five years.
“The OBR forecasts that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast,” he said.
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