McGills Chartered Accountants welcomes the Budget’s support for COVID-19 economic recovery, but highlights future tax rises

Businesses in and around Cirencester and Malmesbury will welcome an additional £65 billion of spending through new loans, grants and the extension of several important schemes announced in the Budget, says McGills Chartered Accountants, but they need to be prepared for a rise in Corporation Tax. 

So far, the nation has spent more than £280 billion protecting jobs and businesses, however, in his latest Budget the Chancellor Rishi Sunak reaffirmed his commitment to helping communities, families and companies as the nation begins to emerge from lockdown.

The latest measures announced in the Chancellor’s speech to Parliament will play a key role in helping businesses rebuild and recover, as the country lifts restrictions under the Prime Minister’s new roadmap.

However, to repay the cost of this support, Mr Sunak also announced a freeze on personal tax allowances and an increase to Corporation Tax that could affect thousands of local business owners in years to come.

Sharla Dandy, Partner at McGills Chartered Accountants, said that the news from the Budget was largely positive and that despite the difficulties that many businesses faced, estimates from the Office for Budget Responsibility predicted economic growth of more than seven per cent by 2022. 

“There is real hope that the country can bounce back from the pandemic and the Budget contains many measures that will assist with this recovery,” said Sharla.

“One key element of the Chancellor’s fiscal plan is the extension of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employed Income Support Scheme (SEISS) until September, which will help keep many more people in work.”

McGills Chartered Accountants pointed out that the CJRS would continue to offer workers up to 80 per cent of their wages, but that businesses would see increases to the contributions they make in July, August and September.

Meanwhile, the SEISS will now be extended so that many people who started out on their own before the pandemic, who have struggled to access support, can now apply as long as they have submitted their Self-Assessment Tax Return for the last year.

McGills Chartered Accountants added: “£5 billion worth of Restart Grants for non-essential retail, hospitality, accommodation, leisure, personal care and gym businesses will also be welcome and a replacement to the existing Government-backed Coronavirus loan schemes, in the form of the Recovery Loan Scheme, will help businesses access loans of between £25,001 and £10 million.”

“The Budget was packed with a range of support initiatives, including an extension to the Business Rates holiday worth £6 billion and a further extension to the VAT cut for hospitality, accommodation and attractions across the UK until the end of September, which will be followed by a smaller rate reduction until 31 March 2022.” 

McGills Chartered Accountants said that the highly innovative ‘super deduction’, which will offer tax relief of up to 130 per cent, could also cut some company’s tax bills by 25p for every pound they spend on new equipment.

Despite the support on offer, McGills Chartered Accountants also wants to highlight the additional tax rises that may be required to help the country as it attempts to repay the costs of COVID-19, which include more than £400 billion of support measures. 

“A tax rise was somewhat inevitable if the country is to balance its books after some of the highest public spending since the Second World War,” said Sharla.

“It is no surprise then that the Chancellor announced a freeze on personal tax allowances and thresholds, from April 2022 until April 2026 and an increase to Corporation Tax that is paid by profitable businesses from 2023.

“We know that businesses with profits of more than £250,000 will pay Corporation Tax at a rate of 25 per cent from this date, instead of the current rate of 19 per cent, but we await further details on this system that will be tapered based on a company’s profits.” 

McGills Chartered Accountants is encouraging businesses and taxpayers to seek advice so that they can take full advantage of the measures announced in the Budget and deal with any upcoming challenges that it may present. 

To find out more about McGills Chartered Accountants’ accountancy, tax and business services, please visit www.mcgills.co.uk.