What you need to know about the March 2021 Budget
Extended Business Rates Relief
During 2020/21, the business rates break provided 358,264 occupied retail, leisure and hospitality premises in England with a year-long exemption with the cost being revised up from £10.13 billion to £11.06 billion.
The Government will continue to provide occupied retail, hospitality and leisure properties in England with 100% business rates relief from 1st April 2021 to 30th June 2021. Businesses can choose to opt out of the relief.
This will be followed by 66% business rates relief for the period from 1st July 2021 to 31st March 2022, capped at £2 million per business for properties required to be closed on 5th January 2021, or £105,000 per business for other eligible properties.
Nurseries will also qualify for relief in the same way as other eligible properties.
When combined with Small Business Rates Relief, the Government say around 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1st April 2021.
The Ministry of Housing, Communities and Local Government forecast Council income from business rates in England at £14.95 billion during 2020/21, but had estimated that revenue to rise to £24.84 billion during 2021/22 if the holiday wasn’t extended.
The Office for Budget Responsibility state the Budget measures provide £6.1 billion of business rates relief during 2021/22 in England with Councils fully compensated for the loss of income. Forecasted rates revenue accordingly falls to £18.74 billion during 2021/22 still up £3.79 billion on the year prior.
The Government will legislate to ensure that the business rates relief repayments made by certain businesses are deductible for corporation tax and income tax purposes. This will ensure these businesses are no worse off from a tax perspective than if they had paid the business rates in the first place. This will apply for repayments made to the devolved administrations as well as to those made in relation to England.
Wales – Rates Relief
Policy by the UK Government in terms of financial support for businesses England, such as business rates reliefs and grants, have resulted in additional Barnett consequential of £740 million for the Welsh Government.
Finance Minister Rebecca Evans has gone further than England with a straightforward yearlong £380 million extension to the business rates exemption for retail, leisure and hospitality with Rateable Values up to £500,000. The Welsh Government said this relief package, in combination with its existing Small Business Rates Relief scheme, will ensure that more than 70,000 businesses will continue to pay no rates at all 2021/22 financial year starting on 1st April.
The Minister has committed to providing firms in the leisure and hospitality sectors with a Rateable Value of over £500,000 with 100% rates relief for 2021/22.
The Government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses. The Government aim is to give the cash certainty required to plan and safely relaunch trading over the coming months.
The Government is providing all Councils in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated. Altogether, this support will cost £5 billion.
This brings the total cost of cash grants provided by the Government to £25 billion since the start of the pandemic.
It had been widely reported that the Government would extend the moratorium on evicting tenants from commercial real estate for non-payment of rent for potentially an additional 3 months, but in the end, there was no announcement.
There are expectations that the Government may keep to the original timetable for this arrangement to be terminated at the end of March.
Capital allowances allow businesses to write off the costs of tangible capital assets, such as plant or machinery, against taxable income. They take the place of commercial depreciation, which is not an allowable tax deduction.
First-year allowances allow enhanced rates of relief for certain plant and machinery investments, providing claims are made in the period the expenditure is incurred. The super-deduction is an enhanced first-year allowance providing an allowance exceeding the cost of the asset.
For qualifying expenditures incurred from 1st April 2021 up to and including 31st March 2023, companies can claim in the period of investment:
- a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
- a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances
This measure is designed to stimulate business investment by increasing the incentive to invest in plant and machinery, offering higher rates of relief than were previously available.
Airports & Ground Handling
The Government is renewing the Airports and Ground Operations Support Scheme (AGOSS) for a further 6 months from 1st April 2021.
Eligibility for the scheme is for:
1) any commercial airport situated within England with a valid commercial licence from no later than 24th November 2020 that operated at least 12 scheduled commercial passenger flights in 2019 and
2) any ground handling company providing any of the handling services listed in EI Directive 96/67/EC in accordance with serving a commercial airport in England.
Firms must have been in receipt of business rates liabilities for the 2020/2021 financial year whilst demonstrating the business losses due to the pandemic during that period.
The further support will be for those eligible businesses in England up to the equivalent of half of their business rates liabilities during 2021/22 subject to certain conditions and a cap of £4 million.
For more detail, visit gov.uk/government/topical-events/budget-2021