Budget 2021: Extension of lifelines welcome, but VAT deferral will hit hard

Gareth Harris, Restructuring Advisory Partner at RSM, said: ‘The Chancellor’s promise to extend several major lifelines for businesses is welcome news. Extension of the furlough scheme, ongoing rates relief, holding VAT for hospitality at 5 per cent for another 6 months, then at 12 per cent for the remainder of the year, the new Recovery Loan scheme of up to £10m and cash grants for the hospitality and leisure sector will all provide relief for businesses struggling to navigate their way out of the pandemic. 

There are however some major concerns around about their general nature and how sustainable these latest measures will be for certain struggling sectors. There was no mention of VAT deferral, so those with large arrears may see payments beginning in April, which, if they don’t take any action could hit them hard for 11 months, or beyond.  There was also nothing about levels of forbearance on CBILS (Coronavirus Business Interruption Loan Scheme), as repayments commence from loans taken out in Lockdown 1.0. The Chancellor also failed to mention any targeted schemes to help industries that are likely to suffer for a long time to come, such as travel and airlines, automotive, events businesses, soft play centres and nurseries.’ 


More from: | Category: Accountancy Company News