Spring Budget 2021: Key Updates for Retail

In the recent Spring Budget announcement, Chancellor Rishi Sunak revealed several plans aimed at supporting the UK economy as the country begins to recover from the Covid-19 pandemic. Retail, in particular, has been one of the sectors hardest hit by the pandemic, and the changes outlined in the budget could have a significant impact on how the industry moves forward. Here’s a breakdown of the key updates for retail:

Business Rates Relief
To provide relief for retail businesses, the business rates holiday in England will be extended until the end of June 2021. This means retail properties will remain fully exempt from business rates until then. After June, for the remainder of the 2021/22 tax year, rates will be reduced by 66%. In Scotland and Wales, retail properties will benefit from 100% relief for 12 months.

Restart Grant
A £5 billion council grant scheme has been introduced to help “non-essential” retailers recover. Retail businesses can apply for grants of up to £6,000 per premises, while hospitality and leisure businesses may be eligible for grants up to £18,000. Additionally, £300 million has been allocated to support theatres, museums, and live music venues, while local communities can apply for up to £1 million to support pubs and other community businesses.

Support for Employees
The furlough scheme, which has been a lifeline for many businesses, will be extended until the end of September. Employees on furlough will continue to receive 80% of their wages, but from July onwards, businesses will be required to contribute 10% towards these wages, with the contribution increasing to 20% in August and September.

Contactless Payment Limit Increase
In a move aimed at making transactions safer, the contactless payment limit will rise from £45 to £100 later this year. This change will allow customers to make higher-value transactions securely without needing to enter a PIN.

Other Key Changes

• The reduced 5% VAT rate for hospitality and accommodation will be extended until 30 September 2021, after which a temporary rate of 12.5% will apply for the next six months.

• There will be no increase in Income Tax, National Insurance, or VAT. The personal tax thresholds will be frozen until April 2026, following a planned increase next year.

• The £20 weekly increase in Universal Credit payments will be extended for another six months.

• The stamp duty holiday will be tapered, with the nil-rate band remaining at £500,000 until 30 June, and then at £250,000 until 30 September 2021.

• Alcohol duties will remain frozen for a second consecutive year, and the planned increase in fuel duty has been cancelled.

Looking Ahead
In the medium term, the Chancellor announced that from 2023, corporation tax will rise by 25% to help address the budget deficit. This highlights a “spend now, pay later” approach to economic recovery. Additionally, there will be significant investment in infrastructure, including the creation of a “green” infrastructure bank to promote sustainability efforts and drive long-term recovery.