Budget 2021: What It Means for Retail

Budget 2021: What does it mean for retail?

In the Government’s latest Budget 2021 announcement, a number of measures have been set out that are designed to help retailers. Speaking at the House of Commons, Chancellor Rishi Sunak outlined plans for the coming months and years.

What support is the government giving to retailers in Budget 2021?

There are a number of extensions and additions that Rishi Sunak announced today. Many of these will provide new opportunities as well as funding for those in the retail sector. Many are asking “What does Budget 2021 mean for shops and retail?”

Here’s an overview of how the Budget 2021 announcement will impact retailers:

Business rates holiday extended

The 100% business rates holiday will be extended until the end of June as part of Budget 2021. After this, a discount scheme will come into effect for the remaining nine months of the tax year, with business rates being discounted by two-thirds, up to £2 million for closed businesses, with a lower cap for those who have remained open throughout lockdowns due to being classed as ‘essential’.

Restart grant

A ‘new restart grant’ of up to £6,000 per premises will be available to non-essential retailers, helping them to reopen in April when restrictions are lifted.

Budget 2021 - Summary for retailers

Furlough scheme extended

The furlough scheme will be extended until the end of September, with employees continuing to receive 80% of their salary for hours they cannot work. Rishi Sunak explained that the furlough scheme will remain the same until July, then businesses will contribute 10% towards their employees’ wages in August and 20% in September as part of Budget 2021.

Recovery Loan Scheme

This will replace the former COVID-19 loan packages, enabling businesses of all sizes to apply for loans between £25,000 and £10 million until the end of 2021. The government is providing lenders with an 80% guarantee as part of the Recovery Loan Scheme.

Increased incentives for apprenticeships

The incentive payments for business to hire apprentices has risen to £3,000 and is applicable to all new hires of any age.

Help to Grow scheme

The Help to Grow scheme will offer online training and management training for businesses that need it, with this being available throughout the UK.

Minimum wage increase

It was also announced that as part of Budget 2021, minimum wage will increase in April to £8.91 per hour.

Corporation tax rise

In 2023, corporation tax will increase from 19% to 25%, however this will only impact retailers that have profits of £250,000 or more. A new ‘small profits rate’ will mean that businesses with profits of £50,000 or less will continue to pay the 19% rate. This rate would then taper above £50,000.

What the industry has to say

Commenting on the continued VAT and business rate temporary relief, James Hyde, Co-founder and CEO, James and James Fulfilment said:

While it is clear that the government is supporting the high street with retail restart grants and extended VAT and business rates relief, we encourage traditional retailers to invest in evolving their business models in light of the move towards digitalisation. Shopping has changed forever and shifted online; and the high street must acknowledge this – it needs to assess how to evolve and incorporate eCommerce into its proposition and/or offer a more entertaining and experiential shopping experience that includes online elements, such as fulfilment and delivery direct to consumers homes. 

In the future we expect to see scenarios where shoppers view demos of products from store assistants and where they try on clothes using ‘smart’ mirrors and have shopping delivered ‘same’ or ‘next day’ via fulfilment centres instead.”

To see the Budget 2021 in full, click here to see all supporting and related documents.