However, the Chancellor’s statement continued to exclude support for over 700,000 limited company director/shareholder businesses. Such directors typically receive most of their remuneration through dividends, an acceptable practice under existing tax rules, and as such continue to receive no support under either the CJRS or the SEISS rules.
Business rates relief, Restart grant and VAT deferral
The Chancellor confirmed continuation of the existing business rates relief in England for the retail, hospitality and leisure sector beyond 31 March 2021.
Eligible businesses will continue to benefit from 100 per cent business rates relief from 1 April 2021 to 30 June 2021 and 66 per cent relief for the period to 31 March 2022. The grant will be capped at £2m per business for properties that were required to be closed on 5 January 2021.
To further support the high street, which is widely recognised as having suffered greatly during the pandemic, the Chancellor announced a new ‘Restart Grant’.
The aim of this grant being to provide an initial cash injection to support the reopening of businesses in the comping months. This scheme will provide up to £6,000 per premises for non-essential retail and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
Businesses which opted to defer VAT payments during the pandemic and which would otherwise have been payable between 20 March and 30 June 2020 have the option to pay them in up to 11 interest-free instalments between March 2021 and 2022 as announced by the Chancellor.
Businesses that do not choose to apply for this payment regime will ordinarily need to pay all the deferred VAT by 31 March 2021.
While the announcement of the above schemes will be welcomed by businesses large and small, many are worried that this does not provide an adequate cash lifeline to support reopening – large high street businesses are concerned that the £2m cap on rates relief is a drop in the ocean and businesses of all size, but particularly SMEs, are concerned that the competing demands on their limited cash to source stock and also begin to make contributions to their rent, furlough and VAT which may have been deferred, may simply be too much.
Extension of reduced VAT rate
The continuation of the reduced rate of VAT in the hospitality and tourism for a further six months to 30 September 2021 was announced in the Budget. Thereafter, the VAT rate will be 12.5 per cent for an additional six months before increasing back to 20 per cent in April 2022.
