Chancellor Rishi Sunak has set out the government’s key changes in what is one of the most widely anticipated Budget announcements for years given the backdrop of inflation, supply chain pressures, pandemic fallout, and shortage of both goods and key workers.
We take a look at how Sunak’s new ‘age of optimism’ budget could impact people, businesses and in particular online retailers.
Inflation is now forecast at 4% according to the Office for Budget Responsibility (OBR), with the UK economy predicted to return to pre-pandemic levels by the end of 2021 following an up-weighted forecast from the OBR to 6.5%, with a 6.1% growth rate forecast for 2022.
There’s particularly good news for small businesses in the form of a 50% Business Rate cut for businesses in the Retail, Leisure and Hospitality trades. This allows for total claim up to £110k for discount on bills. Another welcome change is that the reappraisal of business rates will be made more frequent to at least once every three years.
The whole retail sector will experience a degree of relief in the form of a 50% tax discount; the biggest business tax rate discount for thirty years. This cut is scheduled to end after one year.
Online retailers will also be breathing a sigh of relief, as the mooted online sales tax that had been predicted hasn’t come to pass in this Budget. This tax would have eaten into the margins of eCommerce sellers, on top of other costs such as marketing, transactional fees and shipping.
Another benefit for retail firms is Sunak’s announcement that the current £1m annual investment allowance for businesses will be extended until March 2023. This scheme was initially planned to expire in December 2021.
“I’m announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors.”Chancellor Rishi Sunak
As the world continues to emerge from the pandemic, demand for goods is unfortunately still set to continue to surpass the capacity of the supply chain, which is forecast to cause pressures across the world into 2022.
Measures to mitigate the supply chain pressures were announced, these include:
Lorry Drivers: Continued temporary visas required for HGV drivers around Europe.
Heavy Goods Vehicles: The planned Vehicle Excise Duty (VED) fees for HGV use has been postponed.
Lorry Park Facilities: A much needed funding increase for lorry facilities is planned as part of the forthcoming creation of advanced lorry parks, like those used around the continent. The continued suspension of the road user levy which applies to HGV vehicles carrying a minimum load of twelve tonnes, has also been welcomed.
Other changes include a planned tax relief for the Research and Development industry (R&D) so that include cloud computing and data can be included. The will bring R&D spending to 1.1% of GDP; a closer total to the R&D spend of other European countries.
An investment relief scheme for Green tech firms has also been announced. Sunak stated: “Our ambitious net zero strategy is also an innovation strategy. Investing £30 billion pounds to create the new green industries of the future”.
At Huboo we support our clients so that their business will survive any sudden economic change and pressures. Thanks to our unique approach for eCommerce warehousing and distribution, we are uniquely placed to help retailers have a successful peak season and beyond in spite of challenging external forces. Check out how we can help with the following:
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