BUDGET 2021: A BID TO REBUILD A COVID-HIT COUNTRY
Rarely has a Budget been preceded by as much anticipation and trepidation as Rishi Sunak’s Covid Recovery Budget of 2021.
We’ll leave the personal tax and corporation tax evaluations to the accountants, because like many businesses, our chief concern lies in the legislation around business rates and the relief extended for the retail, leisure and hospitality businesses that have taken such a battering over the past 12 months.
The good news is that the government will continue to provide eligible retail, hospitality and leisure properties in England with 100 per cent business rates relief for the period of April 1st – June 30th 2021, followed by 66 per cent business rates relief from July 1st 2021 to March 31st 2022. The relief will be capped at £2 million per business for properties that were required to be closed on January 5th this year, or £105,000 per business for other eligible properties.
Combined with Small Business Rates Relief, this means that 750,000 retail, hospitality and leisure properties in England will pay no business rates for the next three months, with the vast majority of eligible businesses receiving 75 per cent relief across the year.
Local authorities will be fully compensated for the loss of income as a result of these business rates measures and receive new burdens funding for administrative and IT costs.
However, many businesses – most especially those within the hospitality sector – will argue that the measures aren’t going to go far enough to help get them back onto their feet. Under the government’s current road map, it is likely to be mid-May before pubs and restaurants can operate in an indoor setting – meaning that thousands of venues will have remained closed for months after investing in Covid-secure screening and seating measures.
The British Institute of Innkeeping has said that it is relieved that the Chancellor has made efforts to meet many of the requirements to help rebuild the sector in a statement issued today.
It stated: “The package of support announced meets many of the critical priorities for our members in the form of extended furlough to September, Business Rates cancellation until the end of June and then discounted by two thirds until April 2022, as well as a further extension to the VAT cut to five per cent for the next seven months, followed by an interim rate of 12.5 per cent until the end of March 2022.
The additional grants announced before the budget are broadly welcomed by our members, however, these still do not fully cover the basic ongoing costs of our closed pubs, with many of them still supporting their teams through the furlough process. Very simply, our pubs will continue to build their debts until the day where they are free of restrictions and trading fully.”
The government will also legislate to ensure that the business rates relief repayments that have been made by certain businesses will be deductible for corporation tax and income tax purposes; the objective being that these businesses are no worse off from a tax perspective than if they had paid the business rates in the first place.
This will apply for repayments made to the devolved administrations as well as to those made in relation to England.