Furlough extended and lower VAT rate retained

Chancellor Rishi Sunak confirms continuation of measures in Budget

THE Coronavirus Job Retention (furlough) scheme is to be extended until the end of September, chancellor Rishi Sunak confirmed in the Budget today (3rd March).

Speaking in the House of Commons, Sunak said the scheme will continue as is until July, when business will then be asked to contribute 10%, followed by a 20% contribution in August and September.

The chancellor also said the 5% reduced rate of VAT on food and accommodation for hospitality businesses will be extended until the end of September; the rate will then be increased to 12.5% for six months before returning to the rate of 20% next April.

And he announced a new UK-wide Recovery Loan Scheme for businesses to access loans of between £25,000 and £10 million.

Planned increases in alcohol duty have been cancelled, Sunak said, as has the planned increase in fuel duty.

The chancellor also outlined plans to increase the rate of corporation tax to 25% from April 2023. Businesses with profits of £50,000 or less will continue to be taxed at the current rate of 19% and Sunak said a taper for those above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.

He also unveiled a new £5 billion Restart Grants scheme for hospitality businesses in England, which will provide a one-off cash grant of up to £18,000.

And the chancellor said the Budget contained an additional £2.4 billion for the devolved administrations for 2021-22 through the Barnett formula, including an additional £1.2 billion for the Scottish Government.