Chancellor hails ‘business-friendly government’, despite Corporation Tax hike
The Chancellor said the UK has a “business-friendly government” and a “pro-business tax regime” as he unveiled a raft of measures aimed at helping the SME sector recover from the devastation of three lockdowns.
This included a recovery loan scheme of between £25,000 to £10m to replace support such as CBILS, and guaranteed by government by up to 80%.
The Business Rates holiday will extend to the end of June, followed by a two-thirds discount for the following nine months, which Mr Sunak said is a £6bn tax cut for business.
For businesses in the hospitality and tourism sector the five per cent VAT rate is extended to September 30, after which it will increase to 12.5% for another six months before returning to normal from next April.
Support for training and increasing skills among SMEs has been increased through two specific schemes. Help to Grow Management will provide training for SMEs, with the Government meeting 90% of the cost, while Help to Grow Digital will offer training and 50% discount on new productivity-enhancing software for SMEs, which will benefit an estimated 100,000 small firms.
Also, through a ‘Super Deduction’ measure companies will be able to offset 130% of the cost of new machinery over the next two years, the biggest business tax cut this century, according to Mr Sunak, and one that is expected to boost business investment by 10%, according to the Office of Budget Responsibility.
But, the Chancellor said more than £100bn of support for business must, at some point, be repaid, and from 2023 corporation tax on company profits will rise from 19% to 25%.
However, SMEs with profits of less than £50,000 will continue to pay 19%, which means that 70% of companies will be unaffected.
Mr Sunak also confirmed there will also be a doubling of incentive payments for companies to employ apprentices, up to £3,000.
Neil Berry, tax partner at MHA MacIntyre Hudson, said: “The Chancellor may have over-complicated something that should be simple, but in general the changes he announced in his Budget were good. I was however, surprised he didn’t do more for people looking to buy or sell a business.”