The 2021 Budget: What the latest changes mean for your business

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The government published the 2021 budget this week.

The UK’s small business economy remains in a very fragile state. So the measures announced relating to the extension of furlough and other support measures, the introduction of digital incentives and ongoing access to capital will support their recovery.

Here is a closer look at what Chancellor Rishi Sunak MP announced, with more details on how to access the various support packages:

Extension to the furlough scheme

This has been keeping many businesses afloat over the past year. So it’s no doubt a relief to many that it has now been delayed until the end of September. This will give more businesses time to rebuild as the economy kickstarts, and will result in less unemployment.

Accounting for two thirds of private sector employment, small businesses hold the key to future job creation.

What you need to do: To continue to access furlough, and prepare when it ends, businesses need to be regularly forecasting to assess whether they are making enough revenue to accommodate these changes. Cloud payroll and accounting software can help provide real-time data and map cash flow projections so businesses can make the right decisions and plan for the impact of furlough ending.

Communicate openly and honestly with your employees about what this may mean. For example, if their roles will remain the same as before or potentially be reduced or changed for the longer-term. Find out if you are eligible here.

‘Help to Grow’ scheme for small firms

Sunak announced a new programme to help small and medium sized businesses learn new skills, reach new customers and boost profits.

As part of this you may get access to an Executive Development programme to help you improve business performance and growth potential through Help to Grow. This may also include free online advice and money off software that may help you save time and cut costs.

How to access it: Help to Grow: Management is eligible for UK businesses from any sector that have been operating for more than a year, with between 5-249 employees. Participants need to be decision makers or senior management. Help to Grow: Digital is available for all businesses that employ between 5-249 employees and are registered at Companies House. Full details will be published this summer. See more here.

Business rates holiday

The business rates holiday has been extended for retail, hospitality and leisure until the end of the June, after which point a further 6-month period where rates will be discounted to two-thirds of the normal charge.

This is ahead of the full review of business rates, which is taking place later this year. At Xero, we are calling on the government to fundamentally reform business rates. In 2021, this can’t come soon enough.

Corporation tax

Sunak announced that he will be increasing corporation tax, but not until 2023. This is a good short-result as it will ensure small firms can retain earnings and invest in growth and jobs.

Visa changes to attract workers

Sunak laid out a series of reforms to entice high-skilled workers including scientists, engineers and researchers and technology workers, to work at UK businesses.

This includes making the immigration process far simpler. The aim of which is to ensure firms get the skills they need to contribute to the economy. This follows the recent publication of the Kalifa Review of the UK’s fintech firms.

At Xero, we welcome this introduction, to ensure firms are more resilient and can adapt to their changed customers’ behaviours as a result.

New financial support schemes

Current support packages come to an end soon, so the government announced:

A £5bn fund for restart grants of up to £6,000 per premises for non-essential retailers and up to £18,000 per premises for hospitality and leisure businesses. To apply for the restart grant scheme you must visit your local council’s website. You can find the website for your local council here.
£700m for arts, culture and sporting venues to support reopening.
A recovery loan scheme that replaces bounce back loans and CBILS where the government will guarantee up to 80% of loans from £25,000 to £10m. Applications for this loan will open on 6 April.
Additional support for the self-employed. Claim a grant through the Self-Employment Income Support Scheme.

Some of this information has been taken directly from Gov.uk and is subject to change. Please look out for future updates from the government. See more on our Behind Small Business hub.

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