2021 Budget Recap – Hospitality Highlights
For the hospitality sector 2020 was a car crash. Many businesses diversified, offering deliveries, take outs, meal kits, picnics, hampers, pop-ups, and the list goes on, with many scraping through, but many didn’t make it. Now, parts of the hospitality sector are on the verge of collapse and a recent survey suggests that 41%¹ of sector businesses may fail by mid-2021, with only one in five businesses having enough cash reserves to survive beyond February under the present levels of support. So, what did the Chancellor, Rishi Sunak, offer?
The Furlough Scheme will be extended to the end of September 2021. Employers will be asked to contribute 10% of salary from July 2022, increasing to 20% in August and September 2022. As most hospitality employees can only claim a small proportion of their normal earnings because furlough doesn’t take TRONC into account, how will Furlough help?
Kick Start Apprenticeship Scheme
Increasing recruitment into the hospitality sector will help the industry to rebuild. As an incentive to take on apprentices, under the government-funded scheme ‘onboarding’ grants will rise from £1,500 to £3,000.
The VAT cut to 5%, which is due to come to end on 31 March 2021, will be extended to the end of September 2021, and then rise to 12.5% for the following 6 months, before returning to 20% in April 2022.
The Chancellor could amend the current corporate tax loss relief rules to allow losses incurred during the pandemic to be carried back for a longer period than just one year, which could lead to a tax refund.
Bounce Back Loans
The repayment period for businesses within the sector for Government backed loans will be extended from 6 to 10 years, which will help business by lowering monthly outgoings.
Recovery Loan Scheme
A new scheme will be introduced as the Bounce Back Loan schemes come to an end. The Recovery Loan Scheme will allow businesses to borrow between £25K and £19m with 80% of borrowing guaranteed by the Government.
A new “super-deduction” on tax has been announced, which could encourage regeneration in the high street and hospitality, by enabling companies to claim 130% tax relief on investments in qualifying new plant and machinery assets from 1 April 2021 until 31 March2023.
A new Restart Grant for the hospitality and leisure sectors will be introduced, with each business being able to access up to £18,000 of funding to ‘re-open’ after lockdown.
From April 2023 the tax imposed on company profits above £50,000 will rise from 19% to upto 25%. A tapered rate will be introduced for such profits, so that only companies with profits of £250,000 or more will be taxed the full 25%.
The 100% Business Rate holiday of 2020 will be extended to the end of June 2021, and then will be set at two thirds of value for the remaining 9 months.
Will be frozen to keep costs low, helping the hospitality sectors.