How the Budget announcements affect the hospitality sector

Following the devastating effect of the pandemic on hospitality, today’s Budget signalled an outline for the sector to return to “normality”.

So, what were the key announcements?

Funding sources

• Coronavirus Job Retention Scheme extended to 30 September 2021 with employers required to make contributions from July onwards
• Self-employment funding similarly extended with the 4^th and 5^th SEISS payments also being open to newly self-employed people in 2019/20 assuming those people had lodged their 2019/20 personal tax return
• Business rates relief extended for the whole of 2021/22
• Extended funding for new apprentices recruited
• Restart grants of up to £18,000 for those businesses seeking to re-open over the coming months
• A new Recovery Loan Scheme is available from 6 April and is open until 31 December

Tax matters

The good news:-

• Three-year loss carry back for incorporated and unincorporated business losses
• No increases in Capital Gains Tax (CGT) or Inheritance Tax (IHT) allowances or rates
• No increase in Income Tax or National insurance rates
• The super deduction for qualifying investments by corporate businesses
• From 1 April 2023, no corporation tax rises for smaller companies with profits less than £50,000
• The extension of the 5% VAT rate to 30 September 2021, with an interim 12.5% to 31 March 2022, before a reversion to the standard rate of 20% with effect from 1 April 2022

The bad news:-

• Corporation tax rate increases to 25% with effect from 1 April 2023 for companies with profits in excess of £250,000

Overall, the Budget for the hospitality sector provided some encouragement with a mix of financing and taxation support for struggling businesses looking to re-open and strive towards normal trading as the pandemic begins to ease.

Head of EQ Leisure, Scott Greig, commented,

“We broadly welcome today’s Budget and the measures targeted towards hospitality. However, what we need is a predictable route map out of lockdown, allowing currently closed or restricted businesses the chance to plan their re-opening. Our EQ Leisure team will be happy to speak with clients and non-clients in the sector to offer our unwavering support in getting this sector back to its place at the forefront of the Scottish economy”

If you would like support or advice in relation to this or other issues affecting your business, our EQ Leisure team would be happy to help. Please get in touch by calling one of our offices or emailing leisure@eqaccountants.co.uk.