Chancellor Rishi Sunak is expected to offer continued support to struggling businesses, by further extending both the furlough scheme, and the year-long business rates holiday for the retail, hospitality and leisure sectors.
This extension, reported by the Financial Times, is predicted to be announced in the Spring Budget on 3rd March.
To help prevent a wave of redundancies, it is predicted that the furlough scheme, which was due to come to an end on 30th April, will be extended throughout the summer before being phased out in the autumn. This means the government will continue to pay 80% of the salary of employees (up to a cap of £2,500) for hours not worked.
Alternative job support is expected to remain in place after the furlough scheme ends, with the emergency £20 per week increase in Universal Credit expected to be extended by six months.
The timing and speed of the phasing-out of the third lockdown remains extremely difficult to predict, and this extension gives hope to many businesses and their employees that the potential wave of redundancy after 30th April can be avoided; the hope is that more normal conditions will have resumed during the summer and autumn.
The year-long business rates holiday for retail, hospitality and leisure, first announced in March 2020, is now expected to continue past 31st March 2021, when it was due to expire.
The Chancellor is also set to delay a final report on a review of business rates until the Autumn, in order to allow decisions to be made when the uncertainty caused by the pandemic has lessened.
John Farnsworth, Head of Smith Cooper Corporate Finance comments:
“The hospitality, leisure and retail sectors have been lobbying hard for continued rates support, having been some of the worst-hit sectors in the UK economy. Whilst helpful, many in these sectors with very limited cash reserves and high debts will consider that this alone will be insufficient to ensure their survival; they want further action to stem rent demands and lessen other costs”.
This business rates report will also consider a potential new sales tax on online retailers, many of whom have benefitted from increased sales during the pandemic, to help boost high-street retailers that have suffered a further worsening of the odds against them due to the pandemic.
The Spring Budget
The Spring Budget is widely expected to be dominated by continued emergency support, with big decisions such as significant tax changes, being delayed to a second budget in November. This may mean the anticipated changes to capital gains tax, that have been closely watched by the business community for some months, may be deferred.
We will keep you updated with the latest information as it is announced. To be kept in the loop with our latest updates sign up to our email newsletter here.
You can also find further predictions on changes to the tax regime we may see announced in the Spring Budget in our previous article.
If you need any further details on the current support available for businesses, please do not hesitate to get in touch. You can also visit our COVID-19 support hub which summarises the support available.