‘For now we’ll take it’: Small business owners welcome extended rates and VAT lifelines
Retailers, pub landlords and restaurant owners breathed a sigh of relief today as the Chancellor announced business rates relief will be extended until July - with a 66% discount from July through December - while hospitality's VAT cut to 5% will last until October.
The business rates holiday, implemented for firms in the retail, hospitality and leisure sectors after the pandemic hit last year, had been due to end on March 31.
Sukh Chamdal, chief executive egg-free cake maker Cake Box, which has 140 stores nationwide, including more than 50 in London, said: “It’s good to see the rates relief extension.
“The Chancellor has clearly recognised that this isn’t going to get better for retail overnight – a high street recovery plan needs to fully bake before it comes out of the oven.”
David Moore, owner of Fitzrovia’s Pied à Terre, said: “All in all, it feels like a good budget.
“The reduction in business rates is great, though ultimately I’d be happier if he had said he was willing to look at the system and fix it, but for now we’ll take it.
“The furlough extension and employer contributions of 20% will support those who need it most, as the industry comes back to life.”
He added: “The VAT reduction looks like it’s on the money, with an extension and then a tapered return. Overall I got what I asked for, so now it’s time to focus on regrowth.”
Rik Campbell, co-owner of Soho’s Kricket, said: “I’m feeling inspired. It’s an innovative plan and it feels like the Government are doing what needs to be done - supporting the right businesses and asking for contributions from those that can afford it.”
Chris Galvin, who co-owns the Galvin Brothers restaurant group, welcomed the Chancellor’s announcements - but said that the fallout of Brexit means staffing will continue to be an issue from June onwards.
“We are pleased that the furlough will be extended to help protect jobs through until September, this flexibility will hopefully prevent more loss of jobs, and the VAT and rate extension was a must to give us any chance of recovery,” he said.
The co-founder of bootcamp and gym operator Barry’s UK, Sandy Macaskill, said he does not understand why the leisure sector has not been allocated the same VAT relief as hospitality - an issue gym bosses have been campaigning on for months.
He said: “We welcome news of the restart grants for gyms, but are still perplexed as to why our sector has once again been over-looked for much-needed VAT relief.
“Last year, we saw the government implore people to get back into pubs and restaurants through Eat Out to Help Out with unwavering support for the hospitality industry. We would like to see a similar government-funded ‘Work Out to Help Out’ scheme to help get the nation back to health and support our sector which has been adversely affected by lockdown restrictions.”
Jeremy Simmonds, the co-founder Competitive Socialising, which looks after mini-golf bars Swingers, warned that job losses were not being avoided but merely delayed.
He said: “The budget was largely as predicted. The big news is the extension of the furlough scheme, which is welcomed by many.
“The reality is that the vast sums invested in the furlough scheme will, due to the lack of comprehensive business support, only have served to delay job losses. To protect jobs the government needs to protect the underlying businesses that provide the jobs.”
Rishi Sunak had come under pressure from business leaders from across the hospitality, leisure and cultural sectors over the past months to use the Budget to offer longer-term certainty to bosses, and help the sectors recover, by extending support schemes including business rates relief and VAT cuts into 2022.
He said the business rates relief measure alone has amounted to a tax cut for the sectors worth £10 billion, with a further £6 billion to come. He said the 66% discount from August will be available to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.
The Chancellor also revealed that the 5% reduced rate of VAT extended to the hospitality and tourism sectors would be extended until the end of September, followed by an interim rate of 12.5% for another six months, before a return to the pre-pandemic 20% rate in April next year.
He said that, in total, VAT in the 2021 fiscal year would be cut by nearly £5 billion.
Other measures announced to support the sectors through reopening and into 2022 include the extension of the furlough scheme until the end of September, the introduction of a Recovery Loan Scheme - whereby businesses of any size can apply for loans from £25,000 up to £10 million through to the end of this year, guaranteed by the Government up to 80% - and grants for hospitality and leisure businesses, including gyms, of up to £18,000.
