Budget 2021: How Businesses Will Be Affected

3 March 2021

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Moments ago, Chancellor of the Exchequer Rishi Sunak set out his Budget, outlining the government’s spending and provision plan to help kickstart the UK economy.

Among the numerous spending measures outlined, Sunak announced an extension to the furlough scheme, with plans for the government to cover 80% of employees' wages until July, when employers will be asked to cover 10% of the bill, before the cost increases to 20% in August. 

Businesses will welcome a continued rates holiday, with a 100% coverage rate set to hold until June, while those in the hospitality and tourism sectors can expect VAT to remain at 5%, before an interim increase to 12.5% for the six-month period thereafter.

Restart grants of up to £6,000 are to become available to non-essential retailers, while gyms, leisure centres and hospitality businesses can claim up to £18,000 per unit.

To promote new employment schemes, apprenticeship grants are set to rise to £3,000 for new recruits of any age, with traineeship programmes given a budget of £126m.

Corporation tax is due to rise in April 2023 from 19% to 25% for companies whose profits exceed a set threshold, affecting up to 30% of UK businesses, while smaller businesses will remain at the 19% tax rate.

The OBR expects the British economy to return to pre-COVID levels by mid-2022, with annual growth slated to hit 4% in 2021 and 7.3% next year.

As UK borrowing is forecasted to reach a peacetime record of £355bn in 2021, experts forecast an unemployment rate of 6.5%, lower than the initial 11.9% prediction.

Find out more about this year's budget here.

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