Budget 2021: Shot in the arm for UK economy

Tony Medcalf, tax partner at MHA Moore and Smalley, said: “Today’s budget will provide a much-needed shot in the arm for the UK economy through a range of measures aimed at getting firms in all sectors back on their feet quickly and promoting economic recovery through business growth.

“The extension of the furlough scheme will provide a safety net to employers over the coming months, particularly those in the hospitality industry who will be unable to trade fully before May 17 at the earliest. This, along with the £5 billion restart grants and continued reductions to VAT, will help retail, hospitality and personal care firms to recover as the lockdown is eased.

“There is a strong signal from Government that in the short-term, it will look to raise tax revenues by incentivising business growth rather than through any immediate tightening of the purse strings.

“While corporation tax will be increased to 25 per cent for many businesses, this higher rate remains relatively low among G7 countries and will not take effect until 2023.  This allows us to remain competitive globally. The Chancellor however will retain a lower rate for smaller businesses.  The super deduction to reduce taxable profits for productivity investments will also provide a significant incentive for UK firms to invest in their own long-term growth.

“The Government has also signalled its intention to the levelling up agenda through its creation of a series of freeports, including in the Liverpool City Region, and it will be interesting to see to what extent this will create jobs and growth opportunities across Liverpool and the wider North West region over the coming years.”