Sunak says Budget sets path for recovery
The chancellor set out a £65bn three-point plan in his Budget earlier today to provide support for jobs in the face of the pandemic. Rishi Sunak said his immediate priority continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts – bringing total fiscal support to over £407bn.
Sunak said: “This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
“And, third, in today’s Budget we begin the work of building our future economy.”
In line with the government’s roadmap for the cautious easing of social distancing rules, the Chancellor pledged to keep economic support in place until we are out of lockdown. To protect the livelihoods of those hardest hit, the Coronavirus Job Retention Scheme will be extended to September.
In addition, the business rates holiday in England has been extended by an additional three months. That means 750,000 hospitality, leisure and retail properties in England will pay no business rates for three months from 1st April when combined with Small Business Rates Relief, with further relief available for the rest of the year.
To continue supporting the 150,000 businesses in the tourism and hospitality sectors and to protect 2.4m jobs, the government has extended the temporary 5% reduced rate of VAT until 30th September 2021. To help businesses manage the transition back to the standard rate, a 12.5% rate will then apply for a further six months, until 31st March 2022.
Grant funding will be available to businesses in England through a new £5bn Restart Grant scheme to help the high street, providing up to £18,000, bringing the total spent on business grants to £25bn.
A new Recovery Loan Scheme will also be launched to replace the existing government guaranteed schemes which have supported £73bn of lending to date and close at the end of March.
To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%. In order to support the recovery, the increase will not take effect until 2023.
Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%. A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.