April 2021

standard 20% rate until April 2022. Looking at the impact on individuals, the personal tax allowance will remain at £12,750 until 2026, with the higher rate rising to £50,270 in 2022, while annual exempt allowance from capital gains tax and the VAT threshold exemption levels will also remain the same. Fuel duty will remain frozen too, scrapping a planned increase that was on the books. On the business side, in 2023 the rate of corporation tax is now set to increase to 25%. Smaller businesses with profits lower than £50,000 will be covered by a new small profits rate at 19%. A taper above £50,000 will also be brought in, which will mean only businesses with £250,000 profits will be charged the full rate. Businesses will also be able to carry back losses of up to £2m for up to three years, making it possible for businesses to recoup up to £750,000. Next, the Chancellor announced a 130% super deduction to encourage business investment that would enable firms to reduce their taxes by up to 25p for every pound spent. This will be in force for two years. “This will be the biggest business tax cut in modern history,” said Rishi Sunak. Recovery and growth Looking ahead the Chancellor announced the launch of a national infrastructure bank, initially funded by £12bn from the government, as well as a green recovery bond enabling UK savers to support green projects. Small businesses will also receive support via series of Help to Grow schemes, which are set to start with management, with an executive development programme offered to firms as well as mentoring and peer learning, with government covering 90% of the cost. This will be followed by Help to Grow Digital, with free training and a 50% discount on productivity enhancing software worth up to £5,000 each. The Chancellor encouraged interested businesses to register before the schemes launch in the early Autumn. For more information go to gov.uk/helptogrow Essential work Following the Budget, the industry began to react: “We are pleased that financial support for small businesses has been extended in today’s Budget, and thank the Chancellor for responding to our request to continue the retail business rate relief scheme into the 2021/22 tax year,” said IGA Chief Executive Stuart James. He continued: “There are hard times ahead for independent garages. A significant decline in MOT work is expected from April to June, where motorists took advantage of the MOT Exemption last year. Garages have also experienced lower volumes of servicing and repair work over the past year due to motorists making fewer journeys. Extending the furlough and business rate relief schemes will provide the financial assistance needed to help independent garages through this upcoming difficult period, so they can continue their essential work keeping vehicles in their local communities safe and roadworthy.” Investment and upskilling SMMT Chief Executive Mike Hawes said: “The Budget provides some encouragement to an automotive sector hit hard by the pandemic and additional trading costs but it falls short of the support needed to transform the industry and market to the net zero future to which both the government and industry aspires. Confirmation that the industry’s calls for the furlough scheme to be extended until the end of September have been heeded and is extremely welcome as both the automotive manufacturing and retail sectors have suffered a massive fall in demand over the past year with showrooms still closed and supply chains disrupted. “Measures to support investment and upskilling are of vital importance to the sector but more is needed if the government’s green recovery plan is to be a success. Ensuring the UK has the most competitive environment globally for business investment is essential so, while we welcome in principle the announcement of a super deduction for investment, it is not clear if it will work for manufacturing and plant and machinery so we now seek the fine detail and, ultimately, business rates reform to encourage investment.” On training, Mike observed: “Anything that encourages the recruitment of apprentices would have our full support and it is encouraging to see the accompanying “Build back Better: Our Plan for Growth” commits to upskilling and the need to address some of the weaknesses of the Apprenticeship Levy which does not work for many employers.” He added: “In this crucial year, with COP 26 in the autumn and the sector facing a mammoth task in decarbonizing within just nine years, 10 AFTERMARKET APRIL 2021 BIG ISSUE www.aftermarketonline.net The new super deduction has got to be good for those companies that wish to invest in equipment ”