4 March 2021

Budget Spring 2021 – What does it mean for print?

"It's going to take this country, and the whole world, a long time to recover from this extraordinary situation."

Chancellor of the Exchequer, Rt Hon Rishi Sunak MP

Another ‘Coronavirus Budget' began with a summary of the ‘acute damage' the pandemic has done to the economy and will continue to do so. The Chancellor emphasised that more than 700,000 have lost their jobs and the economy has shrunk by 10% - the largest fall in 300 years, with borrowing being the highest it has been outside of wartime.

But there were economic glimmers of hope joining the success so far of the vaccine rollout, with forecasts suggesting the economy will recover more quickly than previously thought (apparently due to be back to pre-COVID levels by the middle of next year). But it should have been growing - in five years' time the economy will still be 3% smaller than it otherwise would have been without COVID-19.

In total, an additional £65bn of measures were announced today. Here's our first glance at those most likely to affect the print industry:

Employment and staffing

The Coronavirus Job Retention Scheme (aka furlough scheme) will be extended until the end of September. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions - beyond National Insurance contributions (NICs) and pensions - required in April, May and June. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.

Statutory Sick Pay (SSP) Rebate Scheme

SMEs will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. This scheme is a temporary COVID-19 measure intended to support employers while levels of sickness absence are high. As with other business support schemes, the government will set out steps for closing this scheme in due course.

Traineeships

There will be an additional £126m for work placements and training for 16-24 year-olds in the 2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1000 per trainee.

Apprentice payments

The government will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.

Apprenticeships across different employers

The government will introduce a £7 million fund from July 2021 to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers to benefit from the high-quality long-term training that an apprenticeship provides. Employers themselves will also benefit from access to a diverse apprenticeship talent pipeline.

Wages

The Government has asked the Low Pay Commission to make UK-wide recommendations with the aim of reaching the government's target for a National Living Wage (NLW) of two thirds of median earnings, extended to those aged 21 and over, by 2024, provided economic conditions allow.

High-skilled migration

The new Points Based Immigration System has been in effect since January 2021. Today's Budget announced further immigrations measures, with more detail to follow in the summer:

• The introduction, by March 2022, of an ‘elite' points-based visa. Within this visa there will be a 'scale- up' stream, enabling those with a job offer from a recognised UK scale-up to qualify for a fast-track visa
• The reform of the Global Talent visa, including to allow holders of international prizes and winners of scholarships and programmes for early promise to automatically qualify
• A review of the Innovator visa to make it easier for those with the skills and experience to found an innovative business to obtain a visa
• The launch of the new Global Business Mobility visa by spring 2022 for overseas businesses to establish a presence or transfer staff to the UK
• Practical support for small firms that are using the visa system for the first time
• Modernisation of the immigration sponsorship system to make it easier to use
• Establishment of a global outreach strategy by expanding the Global Entrepreneur Programme, marketing the UK's visa offering and explore building an overseas talent network.

Business finance

New loans for recovery

From 6 April 2021 a new Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

VAT deferral

Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.

Trade Credit Reinsurance scheme

Under this scheme the majority of trade credit insurance coverage has been held across the market. Up to £190 billion of cover on around half a million businesses has been provided under the scheme. The government will continue to review the impacts of the scheme to assess whether there is a case for further interventions beyond the scheduled end date of 30 June 2021, in order to minimise disruptions in insurance coverage as the economy recovers.

Extended loss carry back for businesses

To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.

Tax changes

Corporation tax

The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate. .

Personal Allowance and higher rate threshold (HRT)

The income tax Personal Allowance will rise with CPI as planned to £12,570 from April 2021 but will remain at this level until April 2026. The high rate threshold will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026.

National Insurance contributions (NICs) thresholds

As previously announced, and legislated for in February 2021, in 2021-22 NICs thresholds will rise with CPI, bringing the NICs Primary Threshold/Lower Profits Limit to £9,568 and the Upper Earnings Limit (UEL)/Upper Profits Limit (UPL) to £50,270, in line with the income tax higher rate. The UEL/UPL will then remain aligned with the HRT at £50,270 until April 2026. All other NICs thresholds will be considered and set at future fiscal events.

Business support

Super-deduction

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. This upfront super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.

Help to Grow

Help to Grow will be delivered via two schemes - management and digital.

Help to Grow: Management
This is a new UK-wide management programme to upskill 30,000 SMEs in the UK over three years. Developed in partnership with industry, the programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. Over 12 weeks, and 90% subsidised by government, this programme will equip SMEs with the tools to grow their businesses and thrive.

Help to Grow: Digital
Launching in the autumn, this scheme will help 100,000 SMEs to adopt productivity-enhancing software. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.

R&D tax reliefs

The government will carry out a consultation into R&D tax reliefs. This review will consider all elements of the two R&D tax relief schemes and will consider bringing data and cloud computing costs into the scope of relief.

Travel

Fuel Duty

Fuel duty will be frozen in 2021-22 for the eleventh consecutive year.

Vehicle Excise Duty (VED)

The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2021.

VED and Levy rates for heavy goods vehicles (HGVs)

To support the haulage sector and pandemic recovery efforts, the government will freeze HGV VED for 2021-22 and will suspend the HGV Levy for another 12 months from August 2021.

Company vehicles

From 6 April 2021, fuel benefit charges and the van benefit charge will increase in line with CPI.

Energy and environment

Carbon Price Support

The freeze on Carbon Price Support rates at £18 per tonne of carbon dioxide will be maintained in 2022-23. The government intends to set out additional proposals for expanding the UK Emissions Trading Scheme over the course of 2021.

In a ‘freeport' area?

'Freeports' are areas where businesses will benefit from more generous tax reliefs, simplified customs procedures and wider government support. Eight areas have been earmarked -

• Liverpool City Region
• Teesside
• Humber
• East Midlands Airport
• Felixstowe and Harwich
• Plymouth and South Devon
• Solent
• Thames

Supplying into hospitality, leisure and retail?

If you have customers in the hospitality, leisure and retail industries, they will be affected by these measures announced today:

Restart Grants

These are available for:

• up to £6,000 per premises for retail businesses (which will open no sooner than mid-April)
• up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses

Business rates relief

The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.

VAT reduction

The temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector will be extended until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.

Supplying into culture or sports?

If you have customers in the culture or sports industries, they will be affected by these measures announced today:

Culture Recovery Fund

£300 million to extend the Culture Recovery Fund to continue to support key national and local cultural organisations in England as the sector recovers.

National Museums and cultural bodies

£90 million for continued support for government-sponsored National Museums and cultural bodies in England.

Sport Recovery Package

£300 million for continued support to major spectator sports in England, supporting clubs and governing bodies.

More detail on all of the above can be found in The Red Book on the HM Treasury website. You can access this by clicking here.