Accountancy firm Saffery Champness has combed through the detail of the government's three-part plan to recover the UK's economy following the pandemic, and what it means for farming businesses.
In what is only his second budget, Rishi Sunak, Chancellor of the Exchequer, announced his 3-part plan on Wednesday (3 March) ‘to protect jobs and livelihoods of the British people’.
The three parts to the plan are: To continue to do whatever it takes to get through the Covid crisis; to fix public finances; to build the future economy.
Part 1 - through the Covid crisis
Martyn Dobinson, partner at Saffery Champness, said part one was critical to allow farming and rural businesses to retain jobs for their employees.
He said: “As part of part 1, there was the very welcome announcement of the extension to the furlough scheme through to the end of September.
"No changes to terms for employees, but participating businesses are expected to contribute 10% to the cost in July, and 20% in August and September.
“Similarly, the self-employed income support scheme will continue with a fourth and fifth grant available, covering the period through to the end of September.
"Those that have experienced a 30% or more drop in their turnover will receive a grant of 80% of their average profits, whereas those who have experienced a drop of less than 30% will qualify for payments of 30% of their average profits."
Crucially, the Chancellor announced additional support for the more recently self-employed, who have previously not qualified where they did not have the required trading history.
"For those who have filed their 2019/20 tax return by midnight on 2 March, they too will now qualify for the support. This is really good news," Mr Dobinson said.
There was also welcome news for the struggling hospitality and tourism sectors, with the current reduced 5% rate of VAT continuing through to end September.
"There will then be an interim rate of 12.5% for a further 6 months, before the standard rate will be reinstated from April 2022," he added.
“Those in the hospitality and leisure sectors will also be able to benefit from a ‘Business Restart Grant’ of up to £18,000 from April, with non-essential retail benefitting from grants of up to £6,000."
The Chancellor also announced that the business rates holiday will continue to the end of June.
“With the Bounceback and CBILs loan schemes coming to an end, these will be replaced with a new ‘Recovery Loan Scheme’," Mr Dobinson said.
"Businesses of any size will be able to apply for loans of between £25,000 and £10,000,000 until the end of the year, with an 80% guarantee from the government.”
The housing market has also benefitted significantly, Mr Dobinson added.
“The housing market has benefitted from the temporary increase in the SDLT threshold and it was announced that this will be extended for a further 3 months to the end of June.
"After that point, there will be an increased nil rate band for residential property of £250,000 (double the standard rate) until the end of September. The previous regular bands will be reinstated from 1 October.
"In addition, those unable to afford a large deposit will be able to benefit from a Government guarantee on a 95% mortgage application.”
Other measures announced as part of part 1 include an increased in the National Living Wage to £8.91 per hour.
Part 2 - fixing the UK finances
Part 2 of the Chancellor's plan gave some further information on how that continued support will be funded.
Income Tax, National Insurance and VAT rates will not be increased, Mr Sunak confirmed.
Mr Dobinson said: “However, the planned increase in the personal allowance and increase in the higher rate tax threshold from April next year will be frozen at those levels until April 2026.
“Also, the IHT nil rate band, pensions lifetime allowance and CGT annual exemption will be frozen.
"Despite all of the noise and nervousness around potentially significant changes to CGT, there were no announcements by the Chancellor.
"The VAT registration threshold will also be frozen through to April 2024,” he said.
Possibly the most significant announcements in this Budget were around Corporation Tax, Mr Dobinson explained.
“It was announced that for businesses with taxable profits exceeding £250,000, there will be an increase in the rate of Corporation Tax to 25%, but not until April 2023.
"However, to protect those businesses less able to afford an increased Corporation Tax bill, there will be a new small business band.
"Where taxable profits are less than £50,000. Those businesses will continue to benefit from the current low rate of 19%. Between £50,000 and £250,000 there will be tapering.
“In addition, there will be a more generous relief for carry back of corporation tax losses.
“Also, potentially very valuable for businesses is a new ‘super deduction’ for the next 2 years, allowing a deduction of 130%, for tax purposes, of eligible investment expenditure.”
The planned fuel duty increase has also been cancelled.
Part 3 - the future economy
Under part 3, there were announcements of a new investment bank to help fund investment in the green agenda.
Mr Dobinson explained: “New ‘Help to Grow’ schemes were announced to support businesses with funding for management and executive development programmes, innovation and digitalisation with grants of up to £5,000 available.
“There will be consultations on the R&D tax credits and EMI schemes to ensure that they remain competitive.
“Eight new ‘freeports’ across the UK were announced, with funding available for businesses investing in those areas, for creation of new jobs and infrastructure improvement."
He concluded: “As ever, the devil will be in the detail and we will be digesting this and if appropriate commenting on it further in the coming days.”