This afternoon the Chancellor, Rishi Sunak, outlined his tax and spend policies in the budget. Below is a summary of the budget for the tourism and hospitality industry. You can read the what you need to know page summary here or view the budget document here.
Coronavirus Job Retention Scheme (CJRS) extension
The CJRS will be extended across the UK for five months until 30 September 2021. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.
UK Self-Employment Income Support Scheme (SEISS) fourth and fifth grants confirmed
SEISS fourth grant – the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April, and can be claimed from late April. Self-employed individuals must have filed a 2019- 20 Self Assessment tax return to be eligible for the fourth grant.
SEISS fifth grant – there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.
The government will provide ‘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. 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.
VAT reduction for the UK’s tourism and hospitality sector
The temporary reduced rate of 5% VAT for goods and services supplied by the UK tourism and hospitality sector will be extended until 30 September 2021. A 12.5% rate will apply for the subsequent six months until 31 March 2022.
Business rates reliefs
Eligible retail, hospitality and leisure properties in England will be receive 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 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.
New Recovery Loan Scheme for UK businesses
From 6 April 2021 a new Recovery Loan Scheme has been announced to enable businesses of any size to access loans and other kinds of finance up to £10 million per business once the existing COVID-19 loan schemes close. Launching on 6 April and open until 31 December, subject to review, the Government will guarantee 80% of the finance to the lender. Loans will be available through a network of accredited lenders, whose names will be made public in due course. Term loans and overdrafts will be available between £25,001 and £10 million per business. Invoice finance and asset finance will be available between £1,000 and £10 million per business. Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years. Find out more, including eligibility criteria. .
Statutory Sick Pay (SSP) Rebate Scheme
Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. This scheme is a temporary COVID-19 measure intended to support employers while levels of sickness absence are high.
VAT Deferral New Payment Scheme
Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
Extended loss carry back for businesses
To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.
- Unincorporated businesses and companies that are not members of a corporate group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22
- Companies that are members of a corporate group will be able to obtain relief for up to £200,000 of losses in each of 2020-21 and 2021-22 without any group limitations
- Companies that are members of a corporate group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22, but subject to a £2 million cap across the group as a whole
This will be legislated in the forthcoming Finance Bill. Further detail on the group cap will be announced in due course.
Other measures include:
- £300 million to extend the Culture Recovery Fund to continue to support theatres, museums and other cultural organisations in England.
- £90 million for continued support for government-sponsored National Museums and cultural bodies in England.
- £300 million for continued support to major spectator sports in England, supporting clubs and governing bodies.
- Duty rates on beer, cider, wine and spirits will be frozen for another year
- Employers in England who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
- Employers in England who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.
- £7 million fund will be available from July 2021 to help employers in England set up and expand portable apprenticeships to enable people who need to work across multiple projects with different employers.
- A new Help to Grow training scheme over three years for SMEs on digital skills and management skills.
- Airports and Ground Operations Support Scheme renewed for a further six months from the start of 2021-22, providing support for eligible businesses in England up to the equivalent of half of their business rates liabilities during 2021-22, subject to certain conditions and a cap per claimant of £4 million.
- Zoo Animals Fund extended for a further three months until 30 June 2021, providing licensed zoos and aquariums in England with continued support for animal care and essential maintenance costs.
- Funding (over £1 billion) for a further 45 towns in England through the Towns Fund
- Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
- £18.8 million to transform local cultural projects in Hartlepool, Carlisle, Wakefield and Yeovil.
- £28 million to fund the Queen’s Platinum Jubilee celebrations in 2022, delivering a major celebration for the UK.
- £2.8 million to support a UK and Ireland bid to host the 2030 World Cup and £25 million investment in UK grassroots sports, enough for around 700 new pitches.
- From the summer, community groups will be able to bid for up to £250,000 matched funding (with some exceptions) through the £150 million Community Ownership Fund to help them to buy local assets to run as community-owned businesses e.g. pubs, theatres, shops, or local sports clubs.
- Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22
Increase in corporation tax
The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate
Air Passenger Duty (APD) rates to increase in line with RPI from April 2022
This means that the reduced and standard short-haul rates will remain frozen, Long-haul rates will increase in line with RPI. The rates for long-haul economy flights from Great Britain will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £5. Those travelling long-haul by private jets will see the rate increase by £13.
Scotland, Wales and Northern Ireland
An additional £2.4 billion has been allocated to the devolved administrations in 2021-22 through the Barnett formula, as follows
- the Scottish Government: £1.2 billion
- the Welsh Government: £740 million
- the Northern Ireland Executive: £410 million
The devolved administrations will also receive £1.4 billion of funding in 2021-22 outside the Barnett formula.
Other take-outs include:
- Individuals and businesses in Scotland, Wales and Northern Ireland will continue to be supported by the Coronavirus Job Retention Scheme, self-employment grants, loan schemes and VAT cuts..
- Three Growth Deals in Scotland – Ayrshire, Argyll & Bute, and Falkirk – will receive funding more quickly.
- Up to £30 million for the Global Centre for Rail Excellence in Wales.
- Three City and Growth Deals – in North-Wales, Mid-Wales and Swansea Bay – will receive funding more quickly.
- Northern Ireland will benefit from the Corporation Tax exemption for the Northern Ireland Housing Executive, Northern Ireland’s biggest landlord.