The chancellor has announced 50% tax cuts for hospitality venues and investments in skills sector
As the UK emerges out of the pandemic, the Chancellor has announced a series of new measures to strengthen the economy and help businesses bounce back after months of uncertainty. What do the new changes mean for SMEs?
In what seemed like a positive and uplifting speech, Mr Sunak said the UK did not suffer as much as expected as the country seeks to rebuild its economy after the pandemic. “Employment is up. Investment is growing. Public services are improving. The public finances are stabilising. And wages are rising,” Mr Sunak told MPs. Today’s Budget delivers a stronger economy for the British people: stronger growth, with the UK recovering faster than our major competitors.”
There was some good news for businesses, as the chancellor scrapped next year’s planned increase in business rates in England – a cut of £4.6bn over the next five years. Mr Sunak promised more frequent revaluations and tax breaks for firms that make improvements to their properties from 2023. He also announced 50% business rate discounts for pubs, cinemas, restaurants, gyms and other venues. Any eligible company can claim a discount on their bills of 50%, up to a maximum of £110,000 – a business tax cut worth almost £1.7 billion. Sunak added: I’m announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors. Pubs, music venues, cinemas, restaurants, hotels, theatres, gyms. Mr Sunak says that, together with small business rates relief, this means more than 90% of all businesses in these sectors will see a discount of at least 50%.
Firms are welcoming the business rates relief with open arms as they shift their focus to building back their businesses after months of uncertainty and chaos during the pandemic. Russell Payne, Director at ReSolve, a restructuring and investment practice, said: It is pleasing to hear that the public’s finances are in a better state than originally expected, which can be attributed to higher GDP growth during Q2, giving our Chancellor more breathing room and spending power. As announced this afternoon, one of the beneficiaries of this positive fiscal news is the 50% discount to business rates for the retail and hospitality sectors, which is set to help alleviate some of the financial stress caused by the pandemic-induced slowdown of activity. With the Government support having all but come to an end, this will be a welcome relief to businesses, especially SMEs, who can focus on building back their business and servicing their debt.
Under the new measures, the chancellor also announced a cut in air passenger duty for internal UK flights, but there will be a tax rise on “ultra-long haul” flights. There will also be tax cuts on sparkling wine, draught beer and cider, but tax will rise on stronger drinks such as red wine and “white ciders”, from 2023. The planned increase in duty on spirits, wine, cider and beer due to take effect from midnight on Wednesday will be cancelled, Mr Sunak said.
The chancellor has also promised a £3.8 billion investment in a skills revolution to upgrade the British workforce, which includes funding for capital projects, adult education, the 16 to 19 base rate and apprenticeships. However, business leaders are still seeking clarity around the funding announcements, as firms are desperately seeking skilled workers in the digital space. Rod Flavell, CEO of FTSE 250 technology training company FDM Group said: The Covid pandemic has devastated businesses as well as disrupting the education and careers of millions of people from across the country. The Chancellor’s proposals for skills bootcamps, extra funding for digital training and other lifelong learning initiatives is a positive step in the right direction, but so much more needs to be done. Far too many young people are still avoiding a career in critical subjects like computer science and coding, at a time when businesses are crying out for candidates with proficient technical expertise.