Response to the 2021 Budget – James Worthington Managing Director, MyWorkwear
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It was with relief that we witnessed a budget today focused on growth, productivity, and innovation that will enable the UK to recover following the pandemic, rather than increased taxing and pressure on individuals and small businesses who are struggling to survive after what has been such a tough year for us all.
With SME’s as the backbone of the British economy, it’s positive to see that the Chancellor had this at the centre of his announcements. A large proportion of our customers are SME’s, so as a business, we are hopeful that these measures will increase our customer’s buying confidence and help to stimulate the economy.
The continuation of the VAT reduction and business rate holiday will give our customers some well-needed breathing space whilst they recover and get back to business as usual. Plus the longer-term confirmation that corporation tax will not be increased for smaller businesses, will enable SMEs to plan for the future with some comfort that they won’t suddenly be hit with higher taxes.
On the downside, for corporations that make more than £250,000 profit, the 25% corporation tax is a significant blow and my worry is when you combine this with what has gone on with Brexit, large foreign businesses just won’t find the UK appealing anymore for investment. Also, just as alarming, if you dig a little deeper, the corporation tax will actually start to increase from profits over £50,000 and they are planning to taper this up from 19% to the maximum 25% when you hit the £250,000 threshold.
As a business, we have invested heavily over recent years and are planning to continue this model, so we were pleased to see news about the super deduction for investment in things like plant & machinery.
With Mr Sunak forecasting a 10% increase in investment as a result, we hope this tax benefit will encourage others to also take this opportunity to invest in a brighter future for UK business.
We were particularly interested to see the announcement regarding the digital help to grow scheme. During 2020, we saw a major move to online purchasing. With our own in-house technical team, we are lucky to have the skills that enabled us to take advantage of this move to online purchasing. However, other SMEs are not so lucky. The opportunity to get the right skills into these businesses will allow them to move forward more effectively in the new world.
Finally, as a strong supporter and advocate for the future of manufacturing in the UK, all the measures announced to support apprentices and the Kickstarter programme has come as welcome news. These combined with the extension of the Furlough scheme will give businesses the confidence, that we can get through this very challenging period.