FINANCE
BUDGET 2021 ... WILL IT DELIVER RECOVERY ?
The Chancellor outlined his Budget plans in March as we start on the long road to recovery , a road where the direction is by no means certain .
The importance of this Budget cannot be underestimated . Consider the context , the pandemic has caused a shrinking of the economy by ten per cent . The Office of Budget Responsibility predicts unemployment will peak at 6.5 per cent and will then fall , with stronger recovery expected next year .
The Government said the Budget set out a clear plan for a long , slow recovery , allowing for a gradual paying back of the borrowing which had been necessary to safeguard the economy . The Opposition said it ‘ was ‘ unfair and economically illiterate ’, claiming the Government had missed an opportunity to create a fairer society .
Highlights included :
• Extension of furlough and self-employed scheme
• Corporation Tax increase from April 2023 to 25 per cent for all businesses with profits of £ 250,000 or more
• VAT threshold frozen until 2024
• New Recovery Loan to replace Bounce Back Loans and CBILs
• Extension to business rates holiday for hospitality , retail and leisure businesses until the end of June
• Businesses will get £ 3,000 for every apprentice they take on
• Companies can carry back losses up to three years
• Creation of a ‘ Super-Deduction ’ ( capital allowance ) of 130 per cent for investment in business equipment .
We spoke to a cross-section of the Swindon and Wiltshire business community to get their thoughts ...
Rob Chedzoy , General Practice Partner , Milsted Langdon |
Tim Major , Membership Manager of Swindon Chamber of Commerce |
Martin Gurney , Tax Partner , Haines Watts Swindon |
Fiona Scott , Ambassador for Forgotten Ltd |
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Chris Blackwell , Co-Director , TED Mortgages |
“ In total , the Government will have spent more than £ 400 billion on its response to the pandemic .
It is no surprise the Chancellor announced an increase to corporation tax that is paid by profitable businesses from 2023 and a freeze on personal tax allowances and thresholds . There was some relief he chose not to increase capital gains tax rates despite much speculation . This appears to be a likely target for future tax increases , however , at least for now , some planning opportunities remain .”
“ In the Chancellor ’ s budget , we see evidence of a response to three principal asks of the Chamber of Commerce on behalf of our business communities . We set out the need to extend Covid related business support , avoid immediate and onerous rises in taxation which would prohibit growth , and called for significant incentives to encourage businesses ( that do have cash ) to invest in the UK .
While there are difficult measures set out in the Chancellor ’ s speech , they are the building blocks needed to support investment and a return to growth . However , we call upon the Government to do more to facilitate businesses in Swindon and our centres of excellence , to contribute to the levelling-up agenda and recognise the supply chain benefits across the UK in a successful and global Swindon economy .”
“ In my opinion , this is an entirely reasonable and well-reasoned approach . We should not tax the economy without first trying to stimulate a return to higher economic activity . The Chancellor gives himself the opportunity to amend these future provisions should circumstances change , without being seen to have worsened the position with tax increases .”
Fiona Scott of Scott Media is the South West ambassador for Forgotten Ltd , a campaign group for business owners who operate through a limited company and are paid in dividends .
“ The Chancellor has made it very clear there will be no support for us , we need to survive through taking on debt . We have not been forgotten , we ’ ve been deliberately excluded . Mr Sunak however will certainly not be forgotten by us .”
“ It feels like the Government are looking at innovative and progressive ways to build the economy to recover instead of cutting funding of public services .”
For Chris the Stamp Duty threshold of £ 500K and then £ 250k should create more activity alongside five per cent deposit mortgages for first time buyers . “ This will give the banks confidence to lend again with small deposits and will create a new flow of activity in the market again for those who are struggling to save larger deposits .”
Other announcements include the creation of a Covid fraud task force within HMRC to investigate fraudulent claims during the pandemic , and a new visa scheme to allow start-ups and tech firms to source talent from overseas .
10 www . tbeswindonandwilts . co . uk