Chancellor Rishi Sunak’s Spring Budget 2021 brought with it a whole host of measures aimed at supporting the UK’s businesses through the remainder of the COVID-19 crisis and which will come as welcome news to employers. However, the budget was not without its downsides for the UK’s employers.
On the plus side, the extension of the furlough scheme until the end of September was confirmed, meaning that employees will continue to receive 80 per cent of their wages until the start of October.
Furthermore, there was the announcement of the new £5 billion restart grant, along with the Recovery Scheme. The Recovery Scheme will essentially replace the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back, offering firms of any size loans ranging from £25,000 to £10 million, with 80 per cent government backing.
These initiatives, along with other announcements such as the extension of the business rates cut and VAT holiday for hospitality and leisure firms, should see a considerable boost to business confidence and, as a result, lead to a more active hiring environment among UK employers.
However, one point that came in for criticism for its potential to hurt the UK’s employers was the announcement of an increase in corporation tax from 19 per cent to 25 per cent in April 2023. While the full rate will only apply to businesses generating profits of more than £250,000 and firms with profits under £50,000 won’t see any change, the increase has still prompted predictions that employment will suffer.
deVere Group CEO and Founder Nigel Green asserted that “stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”
Green added: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country. Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.”
Author: Steven English