The most relevant points for UK startups and SMEs
Chancellor Rishi Sunak has unveiled a slew of support measures aimed at helping startups and small businesses “level up”. Presenting the much-anticipated 2021 budget, he explained that the government’s tax and spending plan will include the continuation of existing support measures and an “investment-led approach” to economic recovery. Here is a summary of the main points.
- The Coronavirus Job Retention Scheme will be extended to September but employers will be asked to contribute 10% in July and then 20% in August.
- The Self-Employment Income Support Scheme (SEISS) will continue with a fourth and a fifth grant—an additional 600,000 people who became self-employed in 2019-20 will now be able to claim through the scheme.
- A £375 million UK-wide scheme called ‘Future Fund: Breakthrough’ was announced that will see the Government match venture capital investment to take equity in scale-ups in sectors such as life sciences, quantum computing and cleantech.
- The immigration system will be reformed help attract international talent.
- A new Help to Grow scheme will offer up to 130,000 companies across the UK a digital and management boost. It combines a practical curriculum with 1:1 support from a business mentor, peer-learning sessions and an alumni network.
- A new UK-wide Recovery Loan Scheme will make available loans between £25,000 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
- £126 million in new money will create 40,000 more traineeships and double the cash incentive to firms who take on an apprentice to £3,000 payment per hire.
- Beginning April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130% of the cost. This is worth £25 billion to businesses over a two-year period.
- Elsewhere, Corporation Tax will increase to 25% for the largest companies in 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%. Tax will be tapered above £50,000.
Sunak also revealed that the UK economy is projected to rebound in 2021, with annual growth of 4% this year. He said the UK economy will return to pre-Covid levels by the middle of 2022, with growth of 7.3%. In five years time the economy will be 3% smaller than it would have been if not for the pandemic.