Today, Wednesday March 3rd, Chancellor of the Exchequer Rishi Sunak announced his budget. In it, he confirmed that both the business rates holiday and the 5% VAT cut will be extended in order to help hospitality businesses over the next financial year. The cuts, combined with extensions to the furlough scheme and a series of ‘covid grants’, is welcome news for restaurants, pubs, and cafés across the UK.
In a statement published this afternoon, UKHospitality - the UK’s official body for hospitality representation - said:
“The Chancellor has listened to the concerns of the hospitality sector. Details are yet to be pored over but it looks like crucial support will help businesses at a critical time.
“The Chancellor has announced support to help our sector get back up and running, now it is vital that the Government sticks to its date of June 21st for a full reopening of the sector. Delay would see more businesses fail, more jobs lost and undo much of the good work the Chancellor has done to date.”
More details relevant to the hospitality industry are below:
Coronavirus Job Retention Scheme
- The job retention scheme, AKA furlough, has been extended to the end of September.
- The government will continue to cover 80% of wages, up to £2,500 a month throughout May and June.
- Through July the government will ask businesses to contribute 10% of that 80%, which will increase to 20% in August and September.
- The 5% VAT cut has been extended until September 30th.
- Businesses will have to pay 12.5% VAT rate for six months from October.
- The 20% standard VAT rate will not return until April 2022.
- Business rates holiday has been extended through to the end of June.
- Business rates will then be discounted for the remaining nine months of the financial year up to two thirds.
- A new £5bn ‘restart’ grant scheme will give restaurants, pubs, and cafés access to one-off payments of up to £18,000
- Allocations of these grants will be based on the rateable value of the property.
Recovery Loan Scheme
- Businesses will be able to access loans between £25,000 and £10m with the government providing lenders an 80% guarantee.