In his Budget on March 3rd 2021, his second as Chancellor, Rishi Sunak announced his plans for the next year, with a key focus the UK’s recovery post COVID-19. He emphasised the need to ensure the public finances are sustainable, following record peacetime borrowing.
Sunak confirmed the extension of a number of policies created to support the economy through the pandemic. This includes the Coronavirus Job Retention Scheme (CJRS, aka furlough), Self-Employment Income Support Scheme and the Culture Recovery Fund.
The Budget includes several, large measures which will have an impact on business investment as well as individuals’ finances.
For example, income tax bracket thresholds will be maintained for four years between 2021 and 2026, which will increase the numbers paying income tax in each bracket.
Commenting on the Budget, BPI CEO Geoff Taylor said:
"The BPI welcomes the recognition of the importance of the creative industries, including music, in today’s Budget. The music industry has been hit hard by COVID, and the extension of the Cultural Recovery Fund, continued VAT relief and renewed business and self-employment support are welcome – as are the changes to creative industries apprenticeships warmly received and will help our own BRITs Apprentice Scheme.
“It’s vital that venues, musicians, and those working in the wider industry are supported until reopening is possible, as well as ensuring music can play its part in driving economic growth and providing jobs across the UK. As we absorb the detail of today’s announcement, there are some areas still unaddressed, such as an insurance scheme to support the live sector, but a number of welcome steps to support music in the announcements set out today."
The below is an overview of issues that may effect BPI members.
Cultural Recovery Fund
- There is a £300 million extension to the Culture Recovery Fund. No detail has been provided, but it is expected that the Fund will run on the same basis as previously, administered by ACE (in England) and including music venues and organisations; additional funding is being made available in the devolved Nations.
- CJRS / Furlough to be extended until September: the scheme remains in place in its present form in June with employer contributions to increase between July and September (10% employer contributions in July and rising to 20% in August and September).
- SEISS: the self employed support scheme will be extended: from February to April (80% of average trading profits); and in further (5th) stage from April to July (for those whose profits have fallen more than 30% - with more details to follow)
- The higher rate tax bracket will rise to £50,270. The personal allowance will rise with CPI to £12,570.
- NIC Thresholds will rise in line with CPI as set out in February 2021.
- A number of commitments to encourage high skilled migration – including an elite points-based visa, global talent visa and a global entrepreneur programme – the focus here appears to be on tech and innovation
Training and Apprenticeships:
- Extension and increase of employer payments for new apprentice hires; £3000 per new hire between 1/4/21 and 30/9/21 (compared to previous scheme). We are seeking clarification of the impact after September – and assessing the impact on BRITS Apprentices
- Portable apprenticeships in the creative industries to be introduced – with a £7 million fund to set up and expand this type of apprenticeship, recognising the particular issues these have posed in creative settings.
- The Creative Industries Council will be invited, alongside employers to bring forward proposals on this approach (no further detail)
- SMEs will be supported with management training and digital training, with government subsidies available
- Corporation tax will increase in 2023 to 25% for profits over £250,000. Businesses with profits under £50,000 remain at the 19% level, with reliefs for business between the two thresholds.
- The introduction of a tax ‘super-deduction’ which allows industry to recoup 130% of the cost of new plant and machinery through a tax rebate. This is available for five years. It is unclear what he definition of ‘machinery’ is and whether this might be possible to stretch to certain tech and/or equipment of relevance.
- Reform of R&D tax reliefs which will look at the scope of the system. It is not clear what falls within scope of R&D here (potentially creative industries)
- A tax policy consultation is also being published on 23 March – which we will monitor for any other points of interest (nb broader fiscal incentive / tax reliefs are more likely to be considered in the spending review expected in the autumn, such as a music production tax relief)
- Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
- A recovery loan scheme will be introduced which allows for lenders to confidently distribute loans . The Government will guarantee 80% on eligible loans worth between £25,000 and £10 million. Open to all businesses, including those who have already received support from other schemes.
- Restart grants will (in England) of up to £6000 per premised for non-essential retail businesses will be made available; and up to £18,000 per premised for other businesses, including hospitality and leisure. Local authorities are being given an additional £425m discretionary business grant funding.
- A new £375 million fund to help scale up the most innovative, R&D intensive businesses.
- Company vehicle fuel benefit and van benefit charges will increase in line with CPI.
- The Government will review its export strategy by the end of this year – no details are provide about this but reflected in the Government’s growth strategy Build Back Better: Our Plan for Growth also published today – which contains little detail but some references to the importance of the creative industries.
- Fuel and alcohol duty have been frozen
See these links for a top-line fact sheet as well as, for those who want to get into the bones of the document, the full Budget document. There are further documents which set out some of the underlying assumptions in the budget and policy costings available here.
As is usual with Budgets, the fine detail is not yet available and we will be following up with Government and liaising with industry partners to understand the fuller implications and next steps on a number of these issues.