Budget 2021: Response for Leisure & Entertainment Industry
With one of the most anticipated budgets certainly in my lifetime, our Chancellor – Rishi Sunak spelt out quite an honest assessment of where we are, and gave us his 3-part plan, to continue the support for businesses and people’s livelihoods, to start fixing our public finances, and building our future economy.
It was quite encouraging to hear our economy is set to return to pre-corvid levels during the middle of 2022, and that unemployment level forecasts have now been cut from an estimated peak of 11% to 6.5%. The extended measures, including furlough, and self-employment grants, came at no real surprise, but opening it up to circa 600,000 new self-employed individuals was a welcome relief for many. It was disappointing that still no such support was announced for the substantial number of small company owners being remunerated by way of dividends.
With the hospitality and retail sectors being the hardest hit by restrictions brought on by the pandemic, the chancellor announcing the Restart Grants to help reinvigorate those industries to help them reopen as lockdown lifts, was great news. Non-essential retail businesses will open first, so they will receive grants worth up to £6,000. Hospitality and leisure businesses, as well as personal care and gyms, will be eligible for up to £18,000, as they will be under more restrictions.
VAT Reduction Extended
It is great to hear that to protect hospitality and tourism jobs, the 5% VAT reduction is being extended for six months to 30th September, followed by an interim rate of 12.5% from 1st October, not planned to return to the full rate of 20% until April 2022. However, I would have liked this reduced VAT rate to have also included alcoholic drinks too. I know the alcohol duties were frozen, but I just wonder why some duty increase could not have applied to alcohol purchased from supermarkets, which could have then been ringfenced to support our hospitality sector.
Corporation Tax Increase
I had some mixed feelings about the planned corporation tax increase to 25%. This was inevitable and does remain the lowest in the G7. But although the point was made that only in the region of 10% of companies will be affected by the full rate, I would have liked to have seen a smaller rate introduced for those with profits below say £100,000.
Recovery Loan Scheme
“Even with the new Restart Grants, some businesses will also need loans to see them through. As the Bounce Back Loans and Business Interruption Loans schemes end, we’re introducing a new Recovery Loans Scheme to take their place”
With the Leisure & Entertainment sectors being hit the hardest, this new scheme enables businesses the opportunity to apply for loans from £25,000 up to £10m through to the end of this year.
Culture Recovery Fund
There will be £300m additional funding for the Culture Recovery Fund, which supports our art, culture, and sporting institutions as they reopen. This fund has already given loans to over 3,000 cultural organisations in England, including festivals and music venues.
Lastly, is football coming home? We shall see but The Chancellor announced that they are pledging £2.8m of new cash to back the UK and Ireland’s bid to host the World Cup in 2030, with £25m new funding announced alongside this to help grassroots football.
As always, if you have any questions on how these changes might impact your Leisure & Entertainment sector business, or need any other advice please get in touch.