The Budget 2021: Key points for hospitality

We have all been waiting to hear how our sector will be supported in the Budget BUT are very concerned that there were major gaps in today’s announcement and the subsequent Budget documentation.

We have been very clear that the ARG grants are inconsistent and have failed a significant part of our industry; that local authorities are refusing to pay out due to the eligibility criteria set by the government. and if these criteria are not addressed, the support meant for many in our industry will be refused.

Although we very much welcome the idea of the restart grants for bricks & mortar businesses, there needs to be a consistent approach across the whole of our industry. The devil will be in the detail, but that detail is what has prevented parts of our industry from receiving support. This is why we asked for sector specific grants based on turnover.

We have been let down by:

  • No clarification on how the restart grants are going to work
  • No mention of the events, festival or wedding industries
  • No mention of insurance for the events industry
  • No mention of the additional £425 ARG funding pot and who this will help
  • Many still excluded from SEISS
  • No mention of rent support

We still need the Government to provide:

  • Grants for businesses without premises based on pre-covid turnover not discretionary ARG grants
  • Full support until all hospitality can open at full capacities
  • Continued support with rent
  • Alternative opportunities to trade outdoors including a relaxation of street trading rules
  • Allow weddings of over 50 when events can host 5000.

What was announced?

A year on from the temporary financial response to Coronavirus, Chancellor Rishi Sunak announced the budget for the next 12 months as part of a three-part plan to recovery.

With the total Covid fiscal support for 2021/22 standing at £407 billion, Mr Sunak claimed that the government would do “whatever it takes to protect the jobs and livelihoods of the British public.”

The measures outlined by the Chancellor that is applicable for the hospitality industry is as follows:

VAT Rates

The 5% reduced rate of VAT will be extended until 30th September and then will move to an interim rate of 12.5% for six months. The standard rate of 20% will begin again in April 2022.

Business rates holiday

The 100% business rates holiday will be extended through to the end of June, and from there on, nine months will be discounted by two-thirds up to a value of £2m, with a lower cap for businesses who have been able to stay open.

£5 billion for new Restart Grants

A one-off cash grant of up to £18,000 will be given to hospitality, accommodation, leisure, personal care and gym businesses in England.

The ‘new restart grant’, begins in April and is a support package aimed at helping businesses that have had to close due to lockdown restrictions as a result of the coronavirus pandemic. A restart grant worth up to £18,000 for the largest businesses will help shops, pubs, hotels and any other small business through to June 21st.

Recovery Loan Scheme

A new recovery loan scheme will be made available between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.

Furlough Scheme

The furlough scheme will be extended until the end of September and employees will continue to receive 80% of their salary. As businesses reopen, from July the government will ask for a 10% contribution and 20% in August and September from employers.

Self-Employed Support Scheme

The scheme will continue into September, a fourth grant will be made available in April, and a fifth grant in July. Some 600,000 more people who filed a tax return in 2019-20 are now able to claim for the first time.

Supporting people back into work

The government is doubling the incentive payments to £3000 to all new apprentice hires of any age.  

National Living Wage

The National living wage will increase to £8.91 from April 2021.

Contactless payment

The legal limit for single contactless payments will rise from £45 to £100.

Sick pay

Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.

Support beyond the roadmap  

The Chancellor stated that “while it is right to help businesses, the state should not be borrowing to pay for normal public spending. He advised that to get spending down, the following measures would be introduced:

Income tax, National Insurance & VAT will not be raised

Personal tax threshold is frozen – will be increased to £12,070 OR £50,270 until April 2026. VAT registration thresholds will be frozen and HMRC fraud task force will be set up £100m going towards this.  

Corporation tax on profits

  • Corporation tax on profits will be raised to 25% in April 2023 and even then, any struggling business will be un-affected.
  • Small profits rate (profit of less than £50k) will be 19% – these businesses will be unaffected.
  • A business generating £250k of profit will be taxed at the 25% rate.
  • A tax rise will be introduced in two years’ time on bigger, more profitable companies.

Lowest corporation tax and small profit rate

The government will introduce a super deduction for the next two years when companies invest, meaning businesses can reduce their tax bill by 130% of the cost. Ex.: construction firm buying £10m can reduce this currently by £2m but now this can be reduced by £13m. This will be the biggest business tax cut in modern British history . 

Alcohol & fuel duty

Rises in alcohol duty and fuel duty will be cancelled for the time being whilst the country recovers.

Key points for Scotland, Wales and NI:

  • Individuals and businesses in Scotland, Wales and Northern Ireland continue to be supported by the UK Government through the Coronavirus Job Retention Scheme, self-employment grants, loan schemes and VAT cuts. Devolved administrations have received Barnett funding to provide support in areas of devolved responsibility.
  • The Budget confirms an additional £2.4 billion for the devolved administrations for 2021-22 through the Barnett formula. This is an additional £1.2 billion for the Scottish Government, £740 million for the Welsh Government, £410 million for the Northern Ireland Executive.
  • The devolved administrations will also receive £1.4 billion of funding in 2021-22 outside the Barnett formula.
  • £27 million in the Aberdeen Energy Transition Zone and £5 million in the Global Underwater Hub in Scotland, the first stage in delivering the North Sea Transition Deal.
  • Three Growth Deals in Scotland – Ayrshire, Argyll & Bute, and Falkirk – will receive funding more quickly.
  • £4.8 million to support the development of a demonstration hydrogen hub in Holyhead, Anglesey.
  • Up to £30 million for the Global Centre for Rail Excellence in Wales.
  • Three City and Growth Deals – in North-Wales, Mid-Wales and Swansea Bay – will receive funding more quickly.
  • Northern Ireland will benefit from the Corporation Tax exemption for the Northern Ireland Housing Executive, Northern Ireland’s biggest landlord.
  • Almost half of the £400 million New Deal for Northern Ireland funding has been allocated, subject to business cases, to: new systems for supermarkets and small traders to manage new trading arrangements; building greater resilience in medicine supply chains; promoting Northern Ireland’s goods and services overseas; and supporting skills development.
  • £5 million to extend the Tackling Paramilitary Programme in 2021-22.

For more details regarding the budget, visit the website. We will share more details about individual grants, including the restart grant scheme as soon as they are published.  

What is the next course of action?

The fight doesn’t end here. The independent food & drink industry has been missed out of funding again and again and we will keep pressing the issue until our collective voices are heard in Parliament. To do this, we need your help. Thank you to everyone who has taken part in our campaign work so far, but we ask you to again support our sector once more. We will be releasing more resources this week for you to get involved in, so stay tuned to our social media channels and website for more details coming soon.

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