Chancellor Rishi Sunak announced a sweeping set of measures in his Budget with the aim of bolstering the UK economy and helping people and businesses recover from the pandemic.
Verastar’s CFO Paul Doherty watched the Chancellor’s Budget statement. He explains here what the measures mean for the UK economy and particularly for the many thousands of small businesses served by Verastar.
An “honest” Budget
Rishi Sunak was keen to stress in his statement that this was an honest Budget. He used the phrase a number of times as he emphasised that whilst there are tough decisions to be made that will impact all of us for years to come, there’s also room for optimism.
He was frank about the challenges – borrowing is higher now than at any time since the Second World War.
But what were the key announcements, and what do they mean for Verastar’s customers – the SMEs that are the lifeblood of the UK economy?
Business rates holiday
The 100% business rates holiday for an additional three months to June and then a reduction of 66% for another nine months is welcome news for all business owners operating out of physical premises, but for our customers the issue of high street retail vs online retail remains.
There’s a question about the fairness of high street retailers having to pay business rates when online retailers do not. It’s an open sore for our core business customers – how can they compete effectively?
I’m surprised the Chancellor was silent on this issue. Calls for this to be addressed will intensify as the profits of online retailers continue to skyrocket.
Tax treatment of losses
The changes to the tax treatment of losses, enabling businesses to carry back trading losses for three years rather than one year, is one of the most significant announcements of the Budget. Many businesses have lost money during the last 12 months and this helps them recover.
Thanks to this change, businesses negatively impacted by the pandemic can focus on re-starting their businesses this year and can offset losses suffered during the pandemic against their tax liability. I think it’s a smart move that will make a significant difference to viable businesses negatively impacted through no fault of their own.
Hospitality and tourism VAT cut and freeze on alcohol duty
The measures to support the hospitality and tourism sectors give hard-pressed businesses some room to manoeuvre. A combination of the reduction in VAT for a year and a freeze on alcohol duty offers bars and restaurants the flexibility to drive increased footfall and invest in their business.
Furlough extension and The Self-Employed Income Support Scheme (SEISS)
The extension to furlough is a huge relief, although it was widely publicised in advance. Whilst some may question the cost of extending it until September, it avoids the cliff-edge scenario of removing support before businesses are fully up and running.
The extension of the SEISS to approximately 600,000 small business owners who first became self-employed during the 2019/20 tax year will be welcome news to entrepreneurs previously excluded from the scheme.
Help to Grow
The Help to Grow scheme could be very important for all small and medium sized businesses. They can all benefit from learning new skills, reaching new customers and boosting profits. Every business should consider how it can take advantage of Help to Grow to upskill and boost productivity.
Small business owners wear a number of different hats so this support is well thought out.
It’s really encouraging to see the Chancellor backing up his commitments to apprenticeships and doubling the incentive to businesses to £3,000. We’ve run apprenticeships at Verastar and found it a brilliant way to discover new talent and bring people into the organisation. We’ve used apprenticeships across a wide range of ages, roles and professions – going way beyond the traditional idea of what an apprenticeship is.
We know that huge numbers of our customers employ apprentices within their businesses too, so this will be welcome news for them.
A package to truly support small businesses
Between the business rates holiday, the right to offset losses, the increased support for apprentices, the support grants and the extension to the furlough scheme, I believe the Chancellor has assembled a very welcome package of support for small business owners and the high street. The Budget has clearly been designed to build confidence and support business recovery.