There was plenty of good news for the sports and play construction industry – and businesses in general – in this week’s Budget announcement. Unveiling the government’s economic plans, Chancellor Rishi Sunak announced a number of measures affecting our sector.
Return to growth
The Chancellor said that the UK economy will return to pre-COVID levels “by the middle of next year”. Sunak said: “The Office for Budget Responsibility (OBR) forecasts that our economy will grow this year by 4 per cent, then by 7.3 per cent in 2022, by 1.7 per cent in 2023, 1.6 per cent in 2024 and 1.7 per cent in 2025.”
New loan system for business
A new Recovery Loan Scheme (RLS) will replace the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and the CLBILS (for larger businesses).
The new RLS will see businesses of any size being able to apply for loans between £25,000 and £10m until the end of 2021. The government will guarantee these loans by up to 80 per cent.
“Super deduction” for investments
In a major surprise, the Chancellor also revealed a new “super deduction” scheme, which will allow businesses to offset the cost of investments through tax reductions.
“When companies invest, they can now reduce their tax bill by 130% of the cost,” Sunak said, describing it as the “biggest business tax cut in modern British history”.
He then used an example in which a construction company spends £10m on new equipment and can currently reduce its tax bill by just £2.6m.
“The new tax regime means that a company investing £10m in machinery will be able to reduce its tax bill by £13m,” the chancellor said.
The new regime will be in place for the next two years (until 2023).
There will be an increase in corporation tax from 19 per cent to 25 per cent – but this won’t take place until April 2023. For companies with profits below the £50,000 threshold, however, a new small profits rate will be introduced, which means that they will continue to pay the current 19 per cent.
Other major points in today’s budget, which will have an effect on the sports and play construction sector, are:
Support for business
- The Job Retention Scheme (or furlough) has been extended until the end of September 2021.
- Support for the self-employed (those who have sole trader status) will also be continued until September 2021.
- Incentive payments for firms hiring apprentices will be doubled to £3,000. There will also be a £126m fund to help companies offer trainee shifts to apprentices.
Support for sport
- Sports will benefit from extra funding, with the likes of cricket, tennis and horse racing sharing a £300m recovery package.
- In particular, there will be £25m worth of funding to support grassroots football – which reportedly will be enough to build “around 700 new pitches”. (NOTE: We at SAPCA acknowledge that the maths don’t quite seem to add up here, so we look forward to seeing details on how this money will be spent).
- A promise to officially back a joint UK and Ireland bid to host the 2030 FIFA World Cup.
- A separate £150m fund to help communities take ownership of sports clubs, pubs and theatres.
Personal income and tax
- Minimum wage to increase to £8.91 an hour from April.
- No changes to rates of income tax or national insurance.
- Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026.
- Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026.
- No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances.
Commenting on the budget, SAPCA CEO Chris Trickey said: “This is a very business-oriented budget, which is clearly targeted at aiding the recovery of the UK economy as it emerges from the pandemic.
“The funding support for sport is particularly welcomed, as it recognises the importance of sports facilities and the role they play in improving the nation’s health.
“Many members will no doubt also welcome the ‘super deduction’, which will help and encourage companies to invest in new machinery and technology.
“Today’s budget, following on from the government’s COVID-19 roadmap last month, is another important landmark on the journey of pandemic recovery. We look forward to seeing the full details of the Chancellor’s plans.”
You can access the government’s full Budget documents by clicking here.