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

Extension to reliefs recognises ‘this isn’t going to get better overnight’

The Budget saw the Chancellor extend a raft of support measures to business (AFP)

AFP via Getty Images

Naomi Ackerman @nomiackerman|David Ellis @dvh_ellis

3 March 2021

Business owners breathed a sigh of relief today as the Chancellor announced business rates relief will be extended until July, while hospitality's emergency VAT cut to 5% will last until October.

The 100% business rates holiday, for firms in the retail, hospitality and leisure sectors, had been due to end on March 31.

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

Rishi Sunak had come under pressure from leaders from across the hospitality, leisure and cultural sectors in recent months to use the Budget to offer longer-term certainty to bosses, and help the sectors recover, by extending support schemes including business rates relief and VAT cuts into 2022.

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

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

• The extension of the furlough scheme until the end of September

• A Recovery Loan Scheme - whereby businesses of any size can apply for loans from £25,000 up to £10 million through to the end of this year, guaranteed by the Government up to 80%

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

• Small businesses with profits below £50,000 will escape the new 25% rate of corporation tax, with a new Small Profits Rate tier instead being held at 19%

Sukh Chamdal, chief executive egg-free cake maker Cake Box, which has 140 stores nationwide, said: “It’s good to see the rates relief extension.

“The Chancellor has clearly recognised that this isn’t going to get better for retail overnight – a high street recovery plan needs to fully bake before it comes out of the oven.”

Michelle Ovens, founder of trade body Small Business Britain, said: “Extension to September of key programmes such as furlough and SEISS, extension to VAT cuts and the business rates holiday, new grants and new programmes such as the new government-backed lending programme all recognise that the crisis is far from over for small businesses.

“As we look to get small businesses out of this emergency period, this support is absolutely critical. These measures will help small firms move through recovery and start to look at growth again.”

Lisa Hooker, consumer markets leader at PwC, said business across the retail, hospitality and leisure sectors “should be heartened by the tangible measures targeted particularly at smaller businesses that are the lifeblood of our high streets”.

David Moore, owner of Fitzrovia restaurant, Pied à Terre, said: “All in all, it feels like a good budget.

“The reduction in business rates is great, though ultimately I’d be happier if he had said he was willing to look at the system and fix it, but for now we’ll take it.

Cake Box

“The furlough extension and employer contributions of 20% will support those who need it most, as the industry comes back to life.”

He added: “The VAT reduction looks like it’s on the money, with an extension and then a tapered 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’m feeling inspired. It’s an innovative plan and it feels like the Government are doing what needs to be done - supporting the right businesses and asking for contributions from those that can afford it.”

Other restauarant and gym owners welcomed the measures, but pointed to gaps in support and challenges still to come.

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

“We are pleased that the furlough will be extended to help protect jobs through until September, this flexibility will hopefully prevent more loss of jobs, and the VAT and rate extension was a must to give us any chance of recovery,” he said.

The co-founder of bootcamp and gym operator Barry’s UK, Sandy Macaskill, said he does not understand why the leisure sector has not been allocated the same VAT relief as hospitality - an issue gym bosses have been campaigning on for months.

He said: “We welcome news of the restart grants for gyms, but are still perplexed as to why our sector has once again been over-looked for much-needed VAT relief.

“Last year, we saw the government implore people to get back into 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’ scheme to help get the nation back to health and support our sector which has been adversely affected by lockdown restrictions.”

Jeremy Simmonds, the co-founder Competitive Socialising, which looks after mini-golf bars Swingers, warned that job losses were not being avoided but merely delayed.

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

“The reality is that the vast sums invested in the furlough scheme will, due to the lack of comprehensive business support, only have served to delay job losses.

“To protect jobs the government needs to protect the underlying businesses that provide the jobs.”

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