On Wednesday 3 March the UK Chancellor Rishi Sunak announced the Spring Budget 2021, but how will it impact barbershops?
Rishi has set out a £65bn three-point plan to provide support for jobs and businesses as the UK emerges from the pandemic and forges a path to recovery.
The three-point plan aims to protect jobs and strengthen public finances with support for businesses and families through the pandemic, an investment-led recovery as the UK emerges from lockdown and future changes to strengthen public finances.
He said: “Taking into account the significant support announced at the Spending Review 2020, our total COVID-19 support package, this year and next is £352bn and the total fiscal support over this year and next amounts to £407bn.”
How will the March Budget 2021 benefit barbers and hair salons ahead of reopening?
A number of schemes, grants and holidays are being extended due to the ongoing COVID-19 pandemic, which will benefit hairdressers, hair salons and hair businesses. However, the 20% VAT Cut for the hospitality industry has not been extended to benefit the hair industry.
Here are the aspects of the Spring Budget 2021 that could benefit barbers and hair salons in the coming months…
1. Business support and furlough schemes extended until September
The Coronavirus Job Support Scheme and Furlough Scheme will continue throughout lockdown and will be extended until the end of September 2021 across the UK.
There will be no change to the terms of the Furlough Scheme, however after July, businesses will be asked for a 10% contribution, rising to 20% in August and September.
2. Self-Employment Income Support Scheme extended until September and accessible to 600,000 more people
For freelance and self-employed barbers and hairdressers who are able to receive self-employed support, the Self-Employed Income Support Scheme will continue until September 2021. In addition to this, 600,000 more people who filed a tax return in 2019-2020 will be able to claim for the first time.
3. New Restart Grants for hair businesses in England
There will be £5bn for new Restart Grants, which Rishi says will help businesses to reopen and get going again. He says as part of the Grant non-essential retail businesses, including hair salon businesses will receive grants of up to £18,000.
Rishi points out: “That’s £5bn of new grants – on top of the £20bn we’ve already provided. This takes the total direct cash support to business to £25bn.”
4. New UK-Wide Recovery Loan Scheme for businesses of all sizes
A new UK-wide Recovery Loan Scheme which will make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million to help businesses of all sizes through the next stage of recovery.
5. Business rates holiday extended to June
The business rates holiday will be extended through to the end of June 2021. Rish explains: “For the remaining nine months of the year, business rates will still be discounted by two thirds, up to the value of £2m.
6. Funding for Skills and apprenticeships
An additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year. Plus there will be an extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000. There will also be £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
7. Statutory Sick Pay Claims
Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
8. Corporation tax frozen at 19% for small hair businesses
The rate of Corporation Tax will increase to 25% in 2023. However, businesses with profits of £50,000 or less, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
9. National living Wage Increase
The National Living Wage (NLW) will rise from £8.72 per hour to £8.91 per hour from April 2021. This change will result in a full-time worker on NLW expecting to receive £345 more a year.
10. Extension to the VAT cut to 5% for hospitality, accommodation and attractions
The extension to the VAT cut to 5% across hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022. However, as it stands this VAT cut will not apply to hair salons.