Coronavirus has caused unprecedented disruption and forced many companies to close for several months. Businesses in the hospitality sector have been hit particularly hard and many have been unable to survive to challenges of the pandemic. Companies that have survived have suffered huge financial losses. The past year has been challenging for everyone, but we can now see the light at the end of the tunnel.
Back in February, the UK government released a roadmap outlining the gradual easing of coronavirus restrictions. If infection rates continue to fall, then social distancing rules could be lifted completely by 21 June. This is a huge relief to businesses in the hospitality sector, many of which have been closed for most of the past 12 months. On top of this, it has been announced that new measures will be brought in to support businesses in the hospitality sector over the coming months.
Here is everything you need to know about the recent Budget 2021 announcement and how it will affect your small business.
What can I expect from Budget 2021?
Budget 2021 was one of the most important budget announcements in UK history. Businesses in the hospitality sector have been severely affected by the challenges of the coronavirus, and so many hospitality businesses are relying heavily on financial support from the government to help them survive the ongoing effects of the pandemic. Here are some of the key ways that Budget 2021 will support small businesses in the hospitality sector:
Furlough scheme extended
The UK government has announced that the Furlough scheme will be extended until September 2021. This will provide an essential lifeline for hospitality businesses that are struggling during the pandemic. Under the scheme, the government will pay 80% of employee salaries. This takes some of the pressure off employers and should help the economy recover from the financial effects of the pandemic.
Business holiday rates extended
One of the most notable announcements in Budget 2021 is that the government will be extending business holiday rates until the end of June. This will apply to all eligible businesses within the hospitality sector. The government also announced that business rates will be discounted by two-thirds for the remaining nine months of the year.
VAT relief extended
The government has pledged to offer additional support to businesses in the hospitality sector that have been hit hard by the lockdown measures. The current reduced 5% VAT rate will now be extended for an additional six months and continue until 30 September. After this, hospitality businesses will continue to enjoy a reduced VAT rate of 12.6% until April 2022.
Business owners must understand their responsibilities when it comes to tax payments. For instance, Informi states that “any businesses that deferred VAT for balances due between March and June 2020 now need to start repaying them.” Speak with an accountant for advice if you are unsure how the Budget 2021 announcement will affect your business finances and VAT payments.
£5 billion in grants
The government will be awarding £5 billion in recovery grants to support non-essential retailers. Non-essential retailers can apply for a grant of up to £6,000 from the end of April. Whereas, businesses in the hospitality sector can apply for a grant of up to £18,000. This is because they have been closed for longer and suffered bigger losses as a result. This money can be used to help hospitality businesses re-open after lockdown. For instance, the money could be used to fund reopening events or to promote services and offers.
The government has acknowledged that the above measures may not be enough to help hospitality businesses survive post-lockdown. In response to this, a new recovery loan scheme has been introduced that will allow hospitality businesses of any size to apply for loans from £25,000 up to £10m.
The hospitality sector has been hit especially hard by the coronavirus pandemic. Unfortunately, most hospitality businesses have sustained massive financial losses and many have been unable to survive the effects of the pandemic. The good news is, the UK government is continuing to support the hospitality sector and the recent budget announcements should be a welcome relief for many businesses. In total, the coronavirus fiscal support now totals around £407 billion according to smallbusiness.co.uk. Hospitality businesses should take advantage of the financial support on offer and plan to thrive once the lockdown measures have been lifted this summer.