March 2021 Budget: An Update For Businesses
Chancellor Rishi Sunak has laid out his economic plans for the next twelve months with a range of additional business support measures.
Chancellor Rishi Sunak has unveiled his latest Budget statement in the House of Commons.
Laying bare the government's tax and spending plans for the next twelve months, he announced plans to try and rebalance the public finances in the wake of COVID-19.
We’ve put together a summary of the main points all businesses should know (see the full Budget details on the Gov.uk website).
Earlier in the pandemic the government set out its Plan for Jobs initiative underpinning its commitment to protect, support and create employment in every corner of the UK. The latest Budget announcements build on this in the months and years ahead.
Extension of the Coronavirus Job Retention Scheme
In a welcome measure for COVID-weary employers up and down the UK, the Coronavirus Job Retention Scheme is being extended until the 30th September 2021. The government will continue to cover 80% of an employee’s salary for the hours they were furloughed. See how the scheme is changing.
Extension to the VAT cut to 5%
Benefitting the accommodation, hospitality and attractions sectors specifically, the 5% VAT will remain in effect until the end of September. From the 1st October, a 12.5% rate will apply for a further six months until the 31st March 2022.
Further guidance can be found on the GOV.UK website.
£5 billion was also set aside in the budget for new Restart Grants. One-off cash grants of up to £18,000 will be made available for all businesses in the leisure, accommodation, hospitality or personal care sectors in England, including gyms.
To further support the cashflow of businesses, the loss carry back rules are also being extended. These are worth up to £760,000 per company (see the government guidance).
There’s further good news for businesses in the film and TV production sector too with an extension of the Film & TV Production Restart scheme. This will bring about an extra £300 million through the Culture Recovery Fund to support museums and theatres in England as well as other cultural organisations.
Recovery loan scheme
The new Recovery Loan Scheme is being launched at the end of March 2021. It works by offering an 80% guarantee to lenders to help them feel confident in continuing to lend to viable UK companies that have suffered in the pandemic. Again, more information is available on the Recovery Loan Scheme page of the Gov.uk website.
Support for apprenticeships extended
Over recent months companies have been encouraged to take on apprentices with a bonus of up to £2000 for every one they hire. The scheme was due to finish at the end of this month however it has now been extended until September. The incentive payment has also increased to £3,000 per apprentice, regardless of age. Find out more.
On top of this, a £7 million fund was previously set up for a new “flexi-job” apprenticeship programme, enabling apprentices to work with a number of employers in the same sector. An extra £126 million has now been added to the fund for 40,000 additional traineeships in England.
How will the Budget encourage business innovation?
Sunak’s Budget heavily emphasises the need for UK business growth an innovation, demonstrated through a number of new schemes.
The Help to Grow scheme is one of them. Providing up to 130,000 SMEs the tools to boost productivity, it offers business owners training and advice on topics such as digital capability. Government vouchers will also be offered to help firms buy approved software.
Then there’s the ‘Future Fund: Breakthrough’ scheme designed to support highly innovative companies working quantum computing, life sciences or clean technology that are aiming to raise a minimum of £20 million in funding. A useful timeline of all Future Fund updates can be found on the Business Bank website.
Furthermore, innovative companies investing in new equipment will benefit from a new “super-deduction”, cutting their tax bill by 25p for every pound invested. Beginning in April 2021, the move will be worth approximately £25 billion to UK companies over the two-years when the super-deduction is in effect. At this point we recommend reading up on R&D Capital Allowances and considering how your company may benefit.
The government recognises that R&D continues to be the key to post-pandemic recovery. It is therefore consulting on tax reliefs in the research and development sector with the aim of keeping the UK at the cutting edge of innovative research. <link to the new article blog 2 I’ve just written about the consultation.>
Additionally, the Chancellor announced:
- £68 million to fund research into long-duration energy storage prototypes, thus storing excess low carbon energy over greater periods of time and reducing costs.
- £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators. This makes up part of the government’s ambition to generate enough electricity to power every UK home by offshore wind by 2030.
- £4 million for a UK biomass feedstocks programme, devising strategies to enhance production of forest products and green energy crops that can be turned into energy.
All against an existing backdrop of R&D Tax Credits and grants
In addition to these brand new measures, there has for many years been a strong government appetite to encourage business innovation as a way of bolstering economic health.
A range of national and international R&D grants have long been offered with the opening and closing of various competitions and funding rounds throughout the year. A huge variety of grants are available, many of which are run by Innovate UK, and success lies in putting together an outstanding proposal that stands out in the crowd.
There’s a wealth of information on our R&D grants page, plus you may find some of our recent articles on grants useful too:
And R&D Tax Credits
Administered by HMRC since the year 2000, R&D Tax Credits reward innovative companies by refunding a substantial proportion of project costs. This is done either through a rebate on a company’s Corporation Tax, or (for loss-making organisations) as lump sum payments.
Businesses can claim as much as 33 pence per £1 of eligible R&D expenditure, and the scheme is open to all UK businesses regardless of size or sector. As long as an advancement is made in science or technology then R&D Tax Credits could follow - even if the project was abandoned or failed.
It’s a fairly complex relief to get your head around, so we strongly recommend reading our R&D Tax Credits page, together with our recent articles below:
Don’t forget: COVID-19 government support may affect your R&D Tax Credit entitlement
We’ve together some useful guides around planning your R&D work and how coronavirus support could impact your R&D tax relief claim.
At Myriad Associates our expert team are on hand to guide you through all aspects of R&D grants and tax reliefs. Please do get in touch and see how an essential injection of R&D funding could open doors for your business.