The Chancellor has confirmed the business rates holiday and VAT cut for the hospitality sector will be extended.
Speaking to the Commons this afternoon, Rishi Sunak said he will continue to do ‘whatever it takes’ to support people and businesses through the emergency period, outlining a plan to get the economy back on its feet.
He has extended the business rates relief for three months until the end of June. The rest of the year, rates will be reduced by two thirds, up to the value of £2m for closed businesses and a lower cap for those who have been able to stay open.
Sunak recognised that hospitality had been one of the sectors hardest hit and as a result would be extending the 5% VAT cut for hospitality and tourism businesses until September 30.
From then, an interim rate of 12.5% would be introduced for another six months, with the usual 20% rate not returning until April next year.
The plan also unveiled plans for a new Recovery Loan Scheme to replace CBILs, with between £25,000 to £10m available through the new scheme.
Sunak increased the National Living Wage to £8.91 from April and doubled the incentive for employers to take on apprentices to £3,000.
These measures are on top of the extension of the furlough scheme until September, with no change until July.
Employers will then be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September, as the economy reopens.
Restart grants, of up to £18,000, will also be available for hospitality businesses as part of a £5bn scheme.
This is the second full Budget as Chancellor for Rishi Sunak. He said that while the damage done during the pandemic to the economy was ‘acute’, the OBR has forecast a ‘swifter and more sustained recovery’ than it first expected in November.
He also said the economy is now on track to return to pre-Covid levels by the middle of 2022, six months earlier than previously thought.
To fund the new recovery measures, Sunak outlined a number of changes to tax schemes.
Cooperation tax will increase to 25% in April 2023.
Businesses with profits of £50,000 or less will be unaffected with the rate maintained at 19%. Only businesses with profits of £250,000 will be taxed at full 25%.
To ‘sweeten’ this blow, Sunak announced a ‘super deduction’ in tax for companies that invest in innovation. The new scheme will allow companies to offset 130% of the value of any investment against tax for two years, in what he called ‘the biggest tax cut in history’.
In good news for the supplier sector, the planned increase in alcohol duties will be frozen for the second year.
Income tax thresholds will rise to £12,570 and £50,027 next year before it will be frozen until April 2026 and a new infrastructure investment bank will be introduced in Leeds.
This is a breaking news story and will be updated.