Budget brings welcome boost
The moment Rishi Sunak stepped up to make his budget speech, the nation collectively held its breath. While much had been already revealed on the extended furlough scheme and the expansion of the self-employment income support scheme, the Chancellor had reserved some announcements for the day.
The budget covered several issues of particular interest to the plumbing and heating industry, including:
- Extension of the furlough scheme until the end of September, with employees continuing to receive 80% of their wages until the scheme ends.
- Businesses using the furlough scheme will be asked to contribute 10% to wages in July and 20% in August. From September the scheme will be gradually phased out.
- The self-employment income support scheme will be extended to include a fourth and fifth grant.
- The fourth grant will cover February to April and once again be worth 80% of average trading profits up to £7,500.
- The fifth grant will cover June to August but work slightly differently. Those whose turnover has fallen by 30% or more will receive an 80% grant. Those whose turnover has fallen by less than 30% will receive a 30% grant.
- 600,000 newly self-employed workers will now be eligible for the grant as long as they submitted their 2019-2020 tax return before midnight on 2 March 2021.
- Bounce-back loans for businesses to be replaced by a new recovery loan scheme which is 80% guaranteed by the government.
- A new UK Infrastructure Bank will boost investment via green bonds, to accelerate progress to Net Zero.
- Incentive payments for hiring new apprentices (of any age) are being doubled to £3,000.
- £126m will be invested to triple the number of new traineeships.
- Stamp duty holiday to be extended until 30 September 2021.
- No raises to national insurance, income tax or VAT. However, personal tax thresholds will be frozen.
- The personal allowance will remain at £12,750 until 2026.
- The higher-rate threshold will increase to £50,270.
- The rate of corporation tax will increase for many to 25% in April 2023.
- Only businesses with profits of more than £250,000 will be taxed at the full 25% rate.
- Companies with profits of less than £50,000 will remain at 19%.
- Eight freeports to be introduced to help boost the economy, with tax breaks to encourage construction, private investment and job creation.
Kevin Wellman, CEO of the Chartered Institute of Plumbing & Heating Engineering (CIPHE) has largely welcomed the budget announcement, “The Chancellor’s budget has business in mind and the continuation of the furlough scheme indicates that minimising unemployment remains critical. We are encouraged to see further support for the self-employed and SMEs, especially for the 600,000 newly self-employed who missed out on support over the last 12-months.
“As unemployment has risen, it is encouraging that incentives to employ older apprentices are now on a level playing field with their younger counterparts. The £3000 payment is a step in the right direction, but as ever we would urge government to push further to help SMEs in developing the next generation of the workforce. This is needed with urgency in the plumbing and heating industry as it focuses on its contribution to the government’s net-zero commitments. Detail on how green bonds can further support this will be welcomed.”
“Overall, the budget looks good for the industry, with the announced super deduction on investment in plant and machinery assets particularly attractive for manufacturing and even more so in an industry undergoing significant change. The stamp duty holiday extension should release funds for homeowners to work on their property, giving a welcome boost of demand for the industry.”
However, there were some areas that left Kevin feeling less positive, “We would have liked to have seen further, dedicated support for the fuel and water poor. The impact of isolation and its relationship with public services has rarely been brought into sharper focus than in 2020 so it is hoped that an announcement is still to come about their protection. Equally, the freeze on national insurance, income tax and VAT is tempered by the same on the personal allowance. While the rise in corporation tax is not unexpected, the overall picture is one of wider future tax rises. While the budget is aimed at economic recovery, it’s very clear we’ll be paying for the pandemic for years to come. Now must be about ensuring the country is best placed to respond and to support its citizens when the next crisis emerges.”