On 3rd March 2021 the Chancellor Rishi Sunak unveiled his 2021 Budget, outlining the road to recovery for the UK economy which has been badly impacted by the coronavirus pandemic and subsequent lockdowns throughout the last year.
Many businesses small and large have been impacted by the pandemic, whether they have experienced loss of income, have had to alter the way they operate and trade or have had to close altogether. For this reason, business owners want to know what measures are now being laid out to help them get back on their feet.
In this guide, Clarke Bell takes a look at the 2021 Budget, outlining what was announced by the Chancellor and how this will impact businesses.
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Extension of the Job Retention Scheme
The Job Retention Scheme, otherwise known as furlough, has once more been extended and will now end on 30th September 2021.
The scheme was initially introduced in March 2020 to help employers that could no longer afford to keep their employees by paying 80% of their wages up to a maximum of £2,500. Employees must be unable to work in order to receive furlough payments.
The scheme has now been extended with the government continuing to pay 80% until July. From July, the government will contribute 70% of employee’s wages and employers will need to cover 10% for hours not worked.
In August and September, the government will pay 60% and the employer will pay 20%.
Extension of the Self-Employed Income Support Scheme
For any self-employed workers there is further good news as the Self-Employed Income Support Scheme has also been extended.
Mr Sunak announced that there will be a fourth grant for self-employed workers whose income has been badly impacted because of the pandemic. The fourth grant is set at 80% of 3 months’ average trading profits. This is paid in a single instalment and capped at £7,500.
There are also further changes as the grant now takes applicants’ 2019 – 2020 tax returns into account which it previously did not, leaving many newly self-employed workers unable to claim help.
A fifth and final grant was also laid out in the Budget which will be more targeted and determined by how much your turnover has reduced in the year April 2020 to April 2021.
The fifth grant will be worth:
- 80% of 3 months’ average trading profits, capped at £7,500, for those whose turnover has reduced by 30% or more
- 30% of 3 months’ average trading profits, capped at £2,850, for those whose turnover has reduced by less than 30%
Extension of the business rates holiday
A key announcement in the Budget was that the business rates holiday would be extended until the end of June 2021, following which rates will be discounted. This follows findings from the Institute of Chartered Accountants that just 1 in 4 of its members said their clients in industries like retail and hospitality would be able to pay business rates in full at the end of March.
The VAT cut to 5% for businesses in hospitality and tourism will also remain in place until September, after which it will increase to 12.5% and will only return to 20% in April 2022.
Help to grow
The government also announced its new Help to Grow scheme which is expected to help around 130,000 small and medium sized businesses.
The scheme will provide access to management and technology training as well as discounted software in order to help improve productivity. It will also give businesses access to top UK business schools that they could usually not afford.
There are two elements to the scheme:
- Digital: businesses will have access to an online service offering them free advice on how they can improve their digital capability as well as giving them 50% off approved software.
- Management: businesses will have access to a 12-week management programme which will offer subsidised management training.
Recovery Loan Scheme
Another key announcement for businesses was the Recovery Loan Scheme which is designed to ensure businesses of any size can continue to access loans once the existing Bounce Back Loan scheme and Coronavirus Business Interruption Loans end.
The scheme will launch on 6th April 2021 and major banks such as Barclays, Lloyds and Virgin Money have already signed up.
The loan can be used for any legitimate business purpose which includes growth and investment, with loans of between £25,001 and £10 million available per business.
Take the next steps with Clarke Bell
Although many of the measures laid out in the 2021 Budget will help thousands of businesses across the UK, for others that have struggled financially it might be time to consider liquidation.
If your business is insolvent, meaning it can’t pay its debts or daily costs, a Creditors’ Voluntary Liquidation (CVL) might be the best option. (If a CVL isn’t the best option for you, we can advise you what is.)
If a company goes into CVL, it means it will stop trading and be liquidated. This is a completely voluntary process that shows the director has taken proactive steps towards meeting their debt obligations and paying back creditors. This safeguards your reputation as a director, eaves more options open to you in the future and can avoid you being forced into compulsory liquidation.
Find out more about CVL and whether this is the right option for you in our handy guide.
As a formal insolvency process, a licensed Insolvency practitioner must be appointed to carry out and oversee the Creditors’ Voluntary Liquidation, which is where Clarke Bell can help.
If you are looking to liquidate your company through Creditors’ Voluntary Liquidation, our team of experts have over 28 years’ experience and have helped thousands of companies undergo the voluntary liquidation process.
Whatever your situation, we will work closely with you to understand your situation and get the best possible outcome for you and your creditors.
If you’re ready to see how we can help you, simply get in touch today.