THANKS to the many pre-budget news stories there were no real surprises in Chancellor Rishi Sunak’s statement which was aimed at kick-starting the UK economy as it looks toward the end of lock down.
There were some welcome new measures such as the move to encourage apprenticeships as well as an extension to the business rates holiday until June while downsides were few – largely the planned increase in Corporation Tax.
Key points
- Furlough to be extended until the end of September
- Employers to be asked to contribute 10% in July and 20% in August and September
- Minimum wage to increase to £8.91 an hour from April
- No changes to rates of income tax, national insurance or VAT
- Corporation tax on company profits to rise from 19% to 25% in April 2023
- Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
- Tax breaks for firms to “unlock” £20bn worth of business investment
- Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
- Incentive grants for apprenticeships to rise to £3,000 and £126m for trainees
- Fuel duty frozen for 11th consecutive year
Another fuel duty freeze, seen as a positive move even as the UK follows the Road to Zero by 2030. Ashley Barnett, head of fleet consultancy at Lex Autolease, commented: “An alternatively-fuelled future simply can’t happen overnight. The affordability of EVs is a key barrier towards mass adoption and for some people, an ICE vehicle remains their only option.
“Against the backdrop of the pandemic, many people are still using cars as a safer mode of transport and any rises would feel counterproductive at this moment in time. As momentum continues to shift away from petrol and diesel, a future rise in the 10-year fuel duty freeze feels inevitable and will help fund investment in greener alternatives.”
Stephen Haddrill, Director General of the Finance and Leasing Association, said: “As lockdown restrictions begin to ease, there is a real need to instill confidence among consumers and businesses to ensure that any recovery in the economy can be sustained.
“The short-term certainty offered by the extension of furlough into September to help employers and employees is welcome – as is the Chancellor’s support for an investment-led recovery. We also note that the super deduction capital allowance scheme will include plant and machinery acquired on asset finance – an extremely useful measure as leasing and hire purchase are the products of choice for more than a third of the UK’s total investment in equipment, plant and machinery and purchased software.”
