‘For now, we’ll take it’: Small business owners welcome extended rates and VAT lifelines

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Business owners breathed a sigh of relief today as the Chancellor announced that the business rate relief will be extended until July, while the emergency reduction in VAT to 5% for the hotel business will last until October.

The holidays at 100% business rates, for companies in the retail, hospitality and leisure industries, were due to end on March 31.

It will now remain in place until the end of June, with a 66% discount available from July to December for businesses unable to reopen, up to a value of £ 2million. A lower cap will be put in place for those who can stay open.

Rishi Sunak had come under pressure from executives in the hospitality, recreation and culture sectors in recent months to use the budget to provide long-term certainty to bosses and help sectors recover, expanding support programs, including trade tariff relief and VAT reductions in 2022.

The reduced 5% VAT rate extended to the hospitality and tourism sectors will apply until October, followed by an interim rate of 12.5% ​​for another six months, before reverting to the 20% rate. before the pandemic in April of next year. The Chancellor said that in total VAT in fiscal year 2021 would be reduced by almost £ 5 billion.

Other measures announced to support the sectors until the reopening and until 2022 include:

• The extension of the leave until the end of September

• A payback loan scheme – whereby businesses of any size can apply for loans ranging from £ 25,000 to £ 10million through the end of this year, government guaranteed up to 80%

• Grants for hospitality and leisure businesses, including gymnasiums, up to £ 18,000

Small businesses with profits of less than £ 50,000 will escape the new 25% corporate tax rate, with a new level of the small profits rate kept at 19%

Sukh Chamdal, managing director of egg-free cake maker Cake Box, which has 140 stores nationwide, said, “It’s good to see the extension of tariff relief.

“The Chancellor has made it clear that things are not going to improve for retail overnight – a Main Street Stimulus Package needs to be fully baked before it comes out of the oven.”

Michelle Ovens, founder of the trade body Small Business Britain, said: “Extension until September of key programs such as leave and SEISS, extension of VAT reductions and business rate vacations, new subsidies and new programs such as the new government-backed loan program all recognize that the crisis is far from over for small businesses.

“As we seek to get small businesses out of this time of emergency, this support is absolutely essential. These measures will help small businesses get through the recovery and get back on the path to growth. “

Lisa Hooker, Consumer Markets Leader at PwC, said businesses in the retail, hospitality and leisure industries “should be encouraged by the concrete measures targeted especially at small businesses that are rock corner of our shopping streets “.

David Moore, owner of Fitzrovia restaurant, Pied à Terre, said: “Overall this looks like a good budget.

“The reduction in commercial tariffs is great, although in the end I would be happier if he had said he was ready to review the system and fix it, but for now we’ll take it.

Cake box

“The extended leave and employer contributions of 20% will support those who need it most as the industry comes to life.”

He added: “The reduction in VAT seems to be on the money, with an extension and then a declining return. Overall I got what I asked for so now it’s time to focus on regrowth.

Rik Campbell, co-owner of Soho’s Kricket, said: “I feel inspired. It’s an innovative plan and it feels like the government is doing what needs to be done – supporting the right businesses and asking for contributions from those who can afford it.

Other restaurant and gym owners welcomed the measures, but pointed to gaps in support and the challenges ahead.

Chris Galvin, co-owner of the Galvin Brothers restaurant group, welcomed the Chancellor’s announcements but said the fallout from Brexit means staffing will continue to be an issue from June.

“We are delighted that the leave will be extended to help protect jobs until September, this flexibility will hopefully prevent further job losses, and the extension of VAT and rates was essential to give us a chance of recovery, “he said.

Barry’s UK bootcamp co-founder and gym operator Sandy Macaskill said he did not understand why the leisure sector had not received the same VAT relief as the hotel industry – an issue on which gym bosses have been campaigning for months.

He said: “We welcome the news of the restart grants for gyms, but we are still puzzled as to why our industry has once again been overlooked for much needed VAT relief.

“Last year we saw the government implore people to return to pubs and restaurants through Eat Out to Help Out with unwavering support for the hospitality industry.

“We would like to see a similar government funded ‘Work Out to Help Out’ program to help put the nation back into good health and support our sector which has been affected by the lockdown restrictions.”

Jeremy Simmonds, the co-founder of Competitive Socializing, which runs the Swingers mini-golf bars, warned that job losses were not avoided but simply delayed.

He said: “The budget was largely as planned. The big news is the extension of the leave scheme, which is welcomed by many.

“The reality is that the considerable sums invested in the leave plan will, due to the lack of overall support for businesses, only delay job losses.

“To protect jobs, the government must protect the underlying companies that provide the jobs. “

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