The Chancellor’s budget 2021
The Chancellor’s budget 2021 has been much anticipated. The Chancellor announced that all businesses in the Retail, Leisure and Hospitality sectors would be given a further three months’ exemption from Business Rates in England.
In addition to this, he also confirmed that bills for these sectors will be discounted by 66% for the remaining nine months of the year. This will be subject to a cap of £2m for those who were required to be closed on 5 January 2021, and £105,000 for those who were able to remain open.
The Chancellor also mentioned that:
- Nurseries will also qualify for relief in the same way as other eligible properties.
- The government is renewing the Airports and Ground Operations Support Scheme for a further six months from the start of 2021-22. This will provide support for eligible businesses in England up to the equivalent of half of their business rates liabilities during 2021-22, subject to certain conditions and a cap per claimant of £4 million.
- There will be full Business Rates relief in Freeport tax sites in England, once designated. Relief will be available to all new businesses, and certain existing businesses where they expand, until 30 September 2026. Relief will apply for five years from the point at which each beneficiary first receives relief.
There will be no bills issued for these sectors for three months whilst the extended relief calculations are carried out.
There was also mention that the Government will be investing in additional resources and new technology for HMRC, enabling them to carry out initial design and development of “Digitalising Business Rates” to help modernise the business rates system in England and support more effective analysis and oversight of the collection of the tax.
We welcome the news for these sectors for whom we have been lobbying for some time, knowing the impact that the long periods of closure has had on them.
However, we are disappointed that this is not mirroring the Scottish relief of 12 months and that there are caps in situ which will considerably limit the relief for some of our clients. There are also some key sectors which have been omitted including businesses in manufacturing (particularly those that supply retail/hospitality and leisure) and many office-based businesses. In the office sector in particular, the financial implications of the pandemic have been dramatic for many, as seen by the sheer number of companies appealing their rates bills via MCC (material change of circumstance). We estimate this number is now around 350,000.
The Chancellor made the following statement:
The government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses which are opening later. The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding.
• Economy expected to return to pre-COVID levels by the middle of next year, six months earlier than previously thought
• GDP growth forecast for this year downgraded to 4% (from 5.5%), according to the Office for Budget Responsibility
• Unemployment expected to peak at 6.5%
• Forecasts show government borrowing reaching £355bn in 2020/21, 17% of the national income – the highest level since the Second World War. For 2021-22 it climbs to £234bn, 10.3% of GDP
• Debt is set to peak at 97.1% of GDP in 2023-24