Chancellor Rishi Sunak has announced a number of measures to support SMEs and encourage growth in his new budget. Fortunately, the UK’s recovery from the pandemic has been stronger than expected. This has boosted tax revenues and reduced the requirement for financial support that was originally anticipated. In fact, the UK economy is now expected to grow by 6.5% in 2021, returning to its pre-pandemic level by the end of the year. GDP is forecast to increase by 6% in 2022.
- Recovery Loan Scheme extension
The Recovery Loan Scheme (RLS) was launched in April and is designed to support businesses affected by Covid-19 that require additional finance for business purposes such as managing cashflow, investment and growth. Originally due to close at the end of the year, the Chancellor announced that this scheme will be extended until 30th June 2022. Administered by the British Business Bank, the RLS includes a government-backed guarantee on business loans. This guarantee will be reduced from 80% to 70% to as the economy continues to recover.
For more information on RLS and to see whether your business could benefit, click here.
- Annual Investment Allowance extension
To further stimulate business investment and help businesses grow, the government introduced a temporary Annual Investment Allowance (AIA) throughout 2020 and 2021, providing tax relief for plant and machinery investments up to £1m. This was due to fall to £200,000 by the end of the year but has now been extended to 31 March 2023, providing a significant boost to businesses considering investing in the months ahead.
- Business Rates changes
The Chancellor also announced a series of changes to business rates including a pledge to introduce business rate exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible heat networks from 1 April 2023 until 31 March 2035.
There was also some good news for the retail, hospitality and leisure industries with the introduction of temporary business rates relief, meaning businesses in these sectors will receive at least 50% off their business rates bills in 2022/23.
- The Global Britain Investment Fund
Innovative UK businesses are also set to benefit from a £1.4 billion investment fund – The Global Britain Investment Fund will provide grants to encourage internationally mobile companies to invest in the UK’s critical industries, including life sciences and automotive. This will include £354 million to support investment in life sciences manufacturing, increasing resilience for future pandemics, as well as £800 million investment in the production and supply chain of electric vehicles.
- Alcohol duty reforms
Finally, the budget also brought some additional good news for the hospitality industry with alcohol duty reforms promising a more simplified system and hopefully some duty savings to come.