The autumn budget... the very thing business owners had eagerly awaited in recent weeks, and in many ways, Chancellor Rishi Sunak did not disappoint. With measures being introduced, including a 50% cut on business rates for retail, hospitality and leisure, many businesses will be feeling more optimistic this afternoon following Sunak’s announcement.
He was clear that the budget does not draw a line under Covid but that it does mark the beginning of building a more robust economy post-pandemic. It seems we’re off to a good start as forecasts from the Office for Budget Responsibility indicate the economy will grow by 6.5% this year, and it’s predicted that the economy will return to its pre-pandemic size by the start of 2022.
The Recovery Loan Scheme Is Extended By 6 Months
Though sadly, there is a catch. It’s not quite as generous as its original offering, but still a tremendously great scheme to help businesses get back on their feet following a harrowing 18 months.
The Recovery Loan Scheme will now run until the 30th of June 2022, so there’s still plenty of time to take advantage of this government-backed facility. Currently, businesses can access up to £10M in funding through a Recovery Loan, with interest rates capped at 14.99%.
New conditions will be introduced for applications submitted from the 1st of January 2022. Businesses will still be able to borrow through the scheme, though the amount will be significantly less, with a maximum of £2M available per business. Additionally, the government will guarantee 70% of all funds paid out to lenders – a 10% decrease from the current 80% guarantee SMEs can benefit from.
With a Nucleus RLS loan, your business can borrow between £30K all the way up to £10M through secured and unsecured options to beat the Covid blues. We like to give a little extra to our customers, so we’re also providing an exclusive Nucleus RLS loan feature – your business or client will only need to pay interest for the first 12 months.
Chirag Shah, our CEO, shared his thoughts regarding the extension of RLS:
“Today’s Budget demonstrates the government’s commitment to supporting British businesses. The extension of the Recovery Loan Scheme will provide SMEs with a lifeline, giving them the vital funds they need to recover from the effects of the pandemic and invest in their futures while boosting national GDP. However, we all know that the scheme can’t go on forever, and as a result, government and industry must work collaboratively to communicate the options available to SMEs over the short, medium and long term.
“The extension also arrives at a time when we expect significant changes across the lending industry. We’re likely to see the number of lenders reduce significantly, given that many have struggled to compete. However, this will create a more level playing field, and those lenders who do survive will be more refined, have better access to capital, and will be able to help businesses achieve their goals.”
Planned Tax Relief for Hardest Hit Businesses
Running a business through a world pandemic was never going to be easy, but there were some sectors that were not able to operate at all. Hospitality, leisure and retail suffered terribly at the hands of Covid and the subsequent lockdowns.
In April 2020, over 1.6 million employees in the hospitality sector alone were on furlough whilst businesses paused trading entirely and even just five months ago, the figure still remained at just under 590,000.
The government stepped in to help and launched support schemes targeted at supporting the struggling hospitality, retail and leisure sectors, including reduced VAT rates, small business grants, a business rates holiday for 2020/2021, the Coronavirus Job Retention Scheme and of course, the now-infamous Eat Out to Help Out Scheme.
In today's Autumn Budget, the Chancellor offered additional relief to businesses worth an estimated £1.78 billion, revealing the “biggest single-year tax cut to business rates in over 30 years.” But what does that mean for your SME? Well, if you operate in the retail, hospitality and leisure sectors, you can expect a 50% business rates discount in 2022-23, though it’s capped at £110,000.
A Simpler, Fairer and Healthier Alcohol Duty System – Cheers!
After a tough 18 months, pubs and bars have a brighter future ahead of them following a major overhaul of the UK’s alcohol duty system. They’ll find additional relief with the radical new changes to alcohol duty – apparently the biggest change in 140 years.
Duty rates on alcohol will be slashed, and the planned increase in duty on spirits and wine will be cancelled; bars and pubs will benefit from beer and cider duty cuts thanks to the new “draught relief”; a small brewers’ relief (including cider makers) has been introduced, and perhaps a benefit for many of us – the cost of a pint will be permanently cut by 3p – an advantage, he claims, of leaving the EU.
VAT Rates Still Set to Rise
It’s not all good news, though, as the planned VAT rise to 20% is still going ahead. In recent months, businesses have pleaded with the government to keep the lower VAT rates introduced as a temporary Covid support measure. VAT rates will officially return to pre-pandemic levels in April 2022.
Fuel Duty Rise No More
If you or your employees drive a lot for your business, you’ll undoubtedly be happy to hear this one. The planned fuel duty rise has been canned, meaning fuel duty has been frozen for yet another year.
An Increase in National Wages
A welcome change to those on national living/minimum wages, but perhaps an added worry for businesses still struggling to bounce back after the pandemic. Following a salary increase with new rates, businesses will have to pay £9.50 for employees over 23 years old (previously £8.91) and £9.18 for workers aged 21-22 (up from £8.36). Apprentices aged 16 and over who aren’t in full-time education will also get a boost from £4.30 to £4.81 an hour.
Overall, the Autumn Budget included a variety of welcome reliefs for businesses, but sometimes we need a little extra help when the going gets tough. Don’t struggle through the next few years due to depleted cash reserves. Explore the funding options available to your business, including the aforementioned Recovery Loan Scheme and watch your business start to flourish as we inch ever closer to normality.