On Wednesday 3rd March, Chancellor Rishi Sunak stood up in the House of Commons to give what is probably one of the most highly anticipated Budget speeches in many years. A full year into the COVID-19 crisis, his task was not an easy one: to provide workers and businesses with the support they need as the country slowly emerges from lockdown, while simultaneously acting to fix the £355bn hole in the public finances caused by a year of unprecedented borrowing.
However, Mr Sunak said that he would continue to do “whatever it takes” to protect jobs and keep businesses afloat, announcing an additional £65bn of measures across 2021 and 2022.
First on the Chancellor’s agenda was the extension of the furlough scheme, which has so far helped pay the wages of over 11 million employees at a cost of nearly £54bn so far. Originally due to end in April, the government has been facing calls for an extension as its roadmap out of lockdown will keep many businesses closed beyond this date.
Therefore, the Chancellor announced that the furlough scheme will be extended until 30 September, with employees continuing to receive 80% of their wages for hours not worked. From July, however, as businesses reopen, the government will begin asking employers for a 10% contribution, rising to 20% in August and September.
Self-employed support extended and expanded
The Self-Employment Income Support Scheme (SEISS) has previously come under fire from critics due to its eligibility criteria, with hundreds of thousands denied support because they were newly self-employed. So, in his speech, Mr Sunak extended the SEISS with two more grants covering the periods between February and April, and between May and July. But he also expanded access, enabling all self-employed workers who have filed their most recent tax return to claim the grant. This equates to 600,000 more self-employed people who are now eligible.
The Chancellor also announced that businesses who have suffered the most financially will receive the most support from the SEISS. While the fourth grant (February-April), will cover 80% of average trading profits for all eligible applicants, the fifth grant (May-July) will only offer 80% to people whose turnover has fallen by more than 30%. Those whose profits have fallen by less than 30% will be eligible for a grant covering 30% of their average trading profits.
Extra funding for training and apprenticeships
Following the success of the government’s Kickstart Scheme, which helps fund jobs, apprenticeships and training opportunities for young people, the Chancellor also confirmed he would be doubling the incentive payment for apprenticeship hires to £3,000 per apprentice, no matter what their age. He also said the government would be channelling a further £126 million into tripling the number of traineeship placements available.
Support for businesses
Current business grants are due to end in March, so the Chancellor announced a new package of ‘Restart Grants’ for April, tailored to the businesses who need them most. Because non-essential retail businesses are due to open first, they will be eligible for grants of up to £6,000 per premises. Hospitality and leisure businesses won’t be allowed to open until later, so they will be able to access grants of up to £18,000.
In addition to the Restart Grants, Mr Sunak also revealed a new Recovery Loan Scheme to enable businesses of any size to access loan finance ranging from £25,000 to £10 million, with an 80% government guarantee.
He also confirmed that the 100% business rates holiday for retail, leisure and hospitality businesses would be extended until the end of June, with a two-thirds discount applying for the remaining nine months of the financial year. Similarly, he extended the 5% reduced rate of VAT for the hospitality and tourism sector until 30 September, with an interim rate of 12.5% up until April 2022.
How will it affect me?
For tailored advice and guidance on how the new business support announcements could impact your business, please get in touch with our Employment Law team at email@example.com or contact a member of the Employment team.