The Chancellor has published Budget 2021.
- The Red Book outlining all the Budget announcements can be read here.
- A press release “Budget 2021: What you need to know” can be read here.
- A press release “Budget 2021 sets path for recovery” can be read here.
- The Overview of tax legislation and rates (OOTLAR) can be read here.
Richard Bray, Acting Chair of the Charity Tax Group commented:
“While we appreciate that the Government had to focus on the COVID recovery in this Budget, the lack of targeted support for the charity sector is very disappointing. It is important that the vital role of charities is not forgotten and proactive steps are taken to improve the fiscal environment they operate in.
“The extension of the Job Retention Scheme is welcome news for charities still facing uncertainty as a result of COVID-19. The new Restart Grants of up to £18,000 per property could also be very helpful to charities with shops and attractions, but only if there is confirmation that EU state aid rules no longer apply. If this is not the case charities will miss out on millions of pounds of essential funding. It is also crucially important that local authorities are given prompt guidance and support to administer these grants.
“This is particularly important given the lack of general funding for the charity sector, despite the reliance on charitable services and the ongoing financial pressures charities face. Additional support for the arts and sport is helpful but does not go nearly far enough.
“Extension of the business rates holiday is welcome for charities with eligible properties that do not receive 100% rates relief, albeit less generous than in Scotland. It is crucial that the Government confirms that mandatory charity rates relief is secure when the response to the Fundamental Review of Business Rates is finally published in the autumn.
“Similarly, extension of the temporary reduced VAT rate will be helpful to those charities able to benefit from it. However, following the UK’s exit from the EU, the Chancellor has missed an important opportunity to commit to a fundamental review of VAT, which is essential to tackle the structural distortions currently faced by charities resulting in over £2bn a year in irrecoverable VAT.
“We welcome the investment in HMRC’s digital capacity and would urge investment now to ensure that HMRC’s systems, including the Personal Tax Account are ready to facilitate a modern fully automated Gift Aid system.”
Headlines for charities include:
- Job Retention Scheme: Extended by five months until the end of September. Employer contributions will be required from July.
- Restart Grants: Funding in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses. The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding.
- Business rates: The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
- VAT reduction for the UK’s tourism and hospitality sector: The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. A 12.5% rate will apply for the subsequent six months until 31 March 2022. HMRC has published a policy paper relating to this measure which can be read here.
- Recovery Loan Scheme: a new guarantee for lenders of 80% on eligible loans between £25,000 and £10 million The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
- Income Tax and NICs: The income tax Personal Allowance and income tax HRT will rise as planned from April 2021 and will remain at this level until April 2026. The same will apply to NICs thresholds.
- VAT deferral: Reannouncement of the new scheme to stagger repayments of deferred VAT.
- VAT registration threshold: Will be frozen at £85,000 until 2024. A policy paper with further details on this measure can be read here.
- Investment in HMRC resources and digital capacity: This could have implications for MTD and the digitalisation of business rates, as well as increased compliance capacity.
- Community Ownership Fund: New £150 million fund announced.
- Consultation on OECD proposals: The Government will consult on OECD reporting rules for digital platforms and OECD Mandatory Disclosure Rules.
- Social Investment Tax Relief: Extended until April 2023.
- R&D tax reliefs – The government will carry out a review of R&D tax reliefs, with a consultation published alongside the Budget.
- Funding: Support for charities supporting veterans on mental health issues and victims of domestic abuse, as well as zoos
- Levelling Up Fund prospectus launch: The government is launching the prospectus for the £4.8 billion fund. which will invest in infrastructure that improves everyday life across the UK, including town centre and high street regeneration, local transport projects, and cultural and heritage assets.
- Universal Credit: Extension of the temporary £20 per week increase to the Universal Credit standard allowance for a further six months.
- Apprenticeships: New financial support and incentives for organisations to take on more apprentices.
- Review of tax administration for large businesses.
- Income tax exemptions for COVID-19 tests and home office expenses: Extended to the 2021-22 tax year.
- Contactless payment card limit: Single contactless payments up to £100, and cumulative contactless payments up to £300, will be permitted without the need for customers to input their chip and pin.
- Corporation Tax: The rate of Corporation Tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.
- Diverted Profits Tax: the rate increase from 25% to 31% in 2023. Work by CTG means there’s a charity exemption which ensures these rules don’t inadvertently catch charities within a “charitable group” operating Gift Aid.
What was missing…
- Clarification on state aid/subsidy control treatment of exising lockdown grants and new Restart Grants: This is a major disappointment and CTG is seeking urgent clarification from officials.
- Charity support package and Gift Aid support: The Government reiterated details of the £750m support package for charities but disappointingly took no steps to expand this support. The sector’s calls for a temporary increase in Gift Aid was also ignored.
- VAT support for charities: Following the UK’s exit from the EU this is a missed opportunity to commit to a fundamental review of VAT, which would help to address structural distortions in the VAT system affecting charities
- Confirmation that business rates relief for charities will be protected: We now expect the Government to respond to the Fundamental Review of Business Rates in the autumn with an interim update published on Tax Day (23 March).
A more detailed overview of the announcements which may be relevant to charities can be found below (including their paragraph number in the Red Book).
2.14 Coronavirus Job Retention Scheme (CJRS) – To support businesses and employees across the UK through the next stage of the pandemic, the government is extending the CJRS for a further five months from May until the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.
Additional detail from HMRC: Employers will need to continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. They also need to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds. When claiming for periods 1 May 2021 onwards, eligible employees must have been employed on 2 March 2021 and had a Real Time Information (RTI) submission to HMRC notifying a payment of earnings for that employee by their employer between 20 March 2020 and 2 March 2021.
2.15 Self-Employment Income Support Scheme (SEISS) fourth grant – To support the self-employed across the UK through the next stage of the pandemic, the government confirms that the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April, and can be claimed from late April. Self-employed individuals must have filed a 2019- 20 Self Assessment tax return to be eligible for the fourth grant. This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019- 20. All other eligibility criteria will remain the same as the third grant. Further details will be published in due course.
2.16 SEISS fifth grant – The government announces that there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July. Further details will be published in due course.
2.17 Income tax exemptions for COVID-19 tests and home office expenses – The government will extend the income tax exemption and NICs disregard for COVID-19 antigen tests provided by, or reimbursed by, employers and for employer reimbursed expenses covering the cost of home office equipment, to the 2021-22 tax year.
2.19 Universal Credit increase – The government is extending the temporary £20 per week increase to the Universal Credit standard allowance for a further six months in Great Britain, on top of the planned uprating. This measure will apply to all new and existing Universal Credit claimants
2.24 Relaxation in Working Tax Credit hours requirement – The government will continue to treat Working Tax Credit claimants across the UK who have been furloughed, or experienced a temporary reduction in their working hours as a result of COVID-19, as working their normal hours for the duration of the CJRS. This allows these claimants to remain eligible for Working Tax Credit.
2.26 Temporary Stamp Duty Land Tax (SDLT) cut – The government will extend the temporary increase in the residential SDLT Nil Rate Band to £500,000 in England and Northern Ireland until 30 June 2021. From 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.
2.29 High quality traineeships for young people – The government will provide an additional £126 million in England for high quality work placements and training for 16-24 year olds in the 2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
2.30 Payments for employers who hire new apprentices – The government will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.
2.31 Supporting apprenticeships across different employers – The government will introduce a £7 million fund from July 2021 to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers to benefit from the high quality long-term training that an apprenticeship provides. Employers themselves will also benefit from access to a diverse apprenticeship talent pipeline. Employers will be invited to bring forward proposals here, and in particular the Creative Industries Council will be asked to do so in recognition of the potential benefits of this new approach for the creative sector.
2.37 Armed Forces charities – The government will provide up to £475,000 to Armed Forces charities in 2021-22 to support the development of a digital and data strategy for the sector. This will improve the ability of charities to work together and with government. This funding will help to ensure that members of the Armed Forces community across the UK can access the support they need, when they need it.
2.38 Veterans mental health support – The government will provide an additional £10 million in 2021-22 to the Armed Forces Covenant Fund Trust, to deliver charitable projects and initiatives across the UK that support veterans with mental health needs, ensuring that veterans can access the services and support that they deserve.
2.39 Tackling domestic abuse – The government will provide an additional £19 million towards tackling domestic abuse, including £15 million in 2021-22 across England and Wales to increase funding for perpetrator programmes that work with offenders to reduce the risk of abuse continuing, and £4 million between 2021-22 and 2022-23 to trial a network of ‘Respite Rooms’ across England to provide specialist support for homeless women facing severe disadvantage. This comes on top of the £125 million announced at SR20 for local authorities to deliver the Domestic Abuse Bill’s new statutory duty to support victims
2.42 Recovery Loan Scheme – From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
2.43 Restart Grants – The government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses, giving them the cash certainty they need to plan ahead and safely relaunch trading over the coming months. The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated. Altogether, this support will cost £5 billion. This brings the total cost of cash grants provided by the government to £25 billion.
2.44 Statutory Sick Pay (SSP) Rebate Scheme – Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. This scheme is a temporary COVID-19 measure intended to support employers while levels of sickness absence are high. As with other business support schemes, the government will set out steps for closing this scheme in due course.
2.45 VAT Deferral New Payment Scheme – Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
2.46 VAT reduction for the UK’s tourism and hospitality sector – The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
2.47 Business rates reliefs – The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties. When combined with Small Business Rates Relief, this means 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April 2021, with the vast majority of eligible businesses receiving 75% relief across the year.
Local authorities will be fully compensated for the loss of income as a result of these business rates measures and receive new burdens funding for administrative and IT costs.
2.49 Business rates repayments – The government will legislate to ensure that the business rates relief repayments that have been made by certain businesses are deductible for corporation tax and income tax purposes. This will ensure that these businesses are no worse off from a tax perspective than if they had paid the business rates in the first place. This will apply for repayments made to the devolved administrations as well as to those made in relation to England.
2.51 Extended loss carry back for businesses – To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.
- Unincorporated businesses and companies that are not members of a corporate group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22
- Companies that are members of a corporate group will be able to obtain relief for up to £200,000 of losses in each of 2020-21 and 2021-22 without any group limitations
- Companies that are members of a corporate group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22, but subject to a £2 million cap across the group as a whole
This will be legislated in the forthcoming Finance Bill. Further detail on the group cap will be announced in due course.
2.54 Contactless payment card limit – To further support UK consumers and businesses during the COVID-19 response, and following a public consultation by the Financial Conduct Authority, the government has approved an increase to the legal contactless payment limits previously set by the European Commission. This will allow banks to support single contactless payments up to £100, and cumulative contactless payments up to £300, without the need for customers to input their chip and pin. The government looks forward to the banking industry implementing the new limits later this year.
2.55 Extend Zoo Animals Fund – The government will extend the Zoo Animals Fund for a further three months until 30 June 2021, providing licensed zoos and aquariums in England with continued support for animal care and essential maintenance costs
2.56 Culture Recovery Fund – The government will provide £300 million to extend the Culture Recovery Fund to continue to support key national and local cultural organisations in England as the sector recovers.
2.57 National Museums and cultural bodies – The government will provide £90 million for continued support for government-sponsored National Museums and cultural bodies in England.
2.59 Sport Recovery Package – The government will provide £300 million for continued support to major spectator sports in England, supporting clubs and governing bodies.
2.61 Combatting COVID-19 fraud – The government will invest over £100 million in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud within COVID-19 support packages, including the CJRS and SEISS, representing one of the largest responses to a fraud risk by HMRC. In addition, the government will raise awareness of enforcement action in order to deter fraud, and will significantly strengthen law enforcement for Bounce Back Loans.
2.66 This approach underpins the decisions taken in this Budget on tax allowances and thresholds. The income tax Personal Allowance and higher rate threshold (HRT) will be uprated in line with CPI as planned in April 2021, then maintained at that level until April 2026. This decision will not reduce take-home pay and the highest income households will continue to contribute more. This will take effect in April 2022.
2.72 This year the government intends to announce some consultations separately from the Budget, and will publish a Command Paper, ‘Tax policies and consultations (Spring 2021)’ on 23 March 2021.
2.73 Inheritance tax nil-rate band and residence nil-rate band – The inheritance tax nil-rate bands will remain at existing levels until April 2026. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.
2.74 Personal Allowance and higher rate threshold (HRT) – The income tax Personal Allowance will rise with CPI as planned to £12,570 from April 2021 and will remain at this level until April 2026. The income tax HRT will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026. The Personal Allowance applies across the UK. The HRT for savings and dividend income will also apply UK-wide. The HRT for non-savings and nondividend income will apply to taxpayers in England, Wales, and Northern Ireland.
2.75 National Insurance contributions (NICs) thresholds – As previously announced, and legislated for in February 2021, in 2021-22 NICs thresholds will rise with CPI, bringing the NICs Primary Threshold/Lower Profits Limit to £9,568 and the Upper Earnings Limit (UEL)/Upper Profits Limit (UPL) to £50,270, in line with the income tax HRT. The UEL/UPL will then remain aligned with the HRT at £50,270 until April 2026. All other NICs thresholds will be considered and set at future fiscal events. NICs thresholds apply across the UK.
2.76 Capital Gains Tax Annual Exempt Amount (AEA) uprating – The value of gains that a taxpayer can realise before paying Capital Gains Tax, the AEA, will be maintained at the present level until April 2026. It will remain at £12,300 for individuals, personal representatives and some types of trusts and £6,150 for most trusts
2.77 Pensions Lifetime Allowance – The government will maintain the Lifetime Allowance at its current level of £1,073,100 until April 2026.
2.78 Starting rate for savings tax band – The band of savings income that is subject to the 0% starting tax rate will remain at its current level of £5,000 for 2021-22.
2.81 Corporation tax – To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate. In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK.
2.83 Aggregates Levy – The government will freeze the Aggregates Levy rate for 2021-22 but intends to return to index-linking in future.
2.84 Carbon Price Support – The government will maintain the freeze on Carbon Price Support rates at £18 per tonne of carbon dioxide in 2022-23. The government is committed to carbon pricing as a tool to drive decarbonisation and intends to set out additional proposals for expanding the UK Emissions Trading Scheme over the course of 2021.
2.85 Fuel Duty – The government will freeze fuel duty in 2021-22. This is the eleventh consecutive year of the freeze, cumulatively saving the average car driver £1,600 compared to the pre-2010 escalator. Future fuel duty rates will be considered in the context of the UK’s commitment to reach net-zero emissions by 2050.
2.86 Air Passenger Duty (APD) – APD rates will increase in line with RPI from April 2022, meaning that the reduced and standard short-haul rates will remain frozen at the same level since 2012, benefitting over 75% of passengers. Long-haul rates will increase in line with RPI. The rates for long-haul economy flights from Great Britain will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £5. Those travelling long-haul by private jets will see the rate increase by £13.
2.87 Vehicle Excise Duty (VED) – The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2021.
2.90 Red diesel – At Budget 2020, the government announced that it will remove the entitlement to red diesel and rebated biofuels from April 2022, excepting use for agriculture (including horticulture, fish farming and forestry), rail vehicles and for non-commercial heating. Alongside Budget the government is publishing a summary of responses to last year’s consultation and setting out next steps on these tax changes. This confirms further exceptions to the red diesel ban after April 2022: those using red diesel to power vessels for commercial purposes, including fishing and water freight, travelling funfairs and circuses, amateur sports clubs as well as golf courses, and non-commercial power generation.
2.91 VAT threshold – The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022, giving businesses certainty.
2.92 Review of tax administration for large businesses – In recognition of the role that tax administration plays in supporting the UK’s competitiveness and promoting investment, the government will review large businesses’ experiences of UK tax administration, including the degree to which it provides businesses with early certainty where appropriate, ensures the efficient resolution of disputes in accordance with the law, and promotes a collaborative and constructive approach to compliance with the law. Discussions will be initiated with businesses, advisers and stakeholders over the coming months, to solicit views and build an understanding of the perceived challenges in this area, with a view to considering what improvements can be made as HMRC continues to progress its 10-year Tax Administration Strategy and wider Tax Administration Framework Review.
2.95 Interest harmonisation and reform of penalties for late submission and late payment of tax – The government will reform the penalty regime for VAT and Income Tax Self Assessment (ITSA) to make it fairer and more consistent. The new late submission regime will be points-based, and a financial penalty will only be issued when the relevant threshold is reached. The new late payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is. The government will introduce a new approach to interest charges and repayment interest to align VAT with other tax regimes. These reforms will come into effect: for VAT taxpayers, from periods starting on or after 1 April 2022; for taxpayers in ITSA with business or property income over £10,000 per year, from accounting periods beginning on or after 6 April 2023; and for all other taxpayers in ITSA, from accounting periods beginning on or after 6 April 2024.
2.97 OECD reporting rules for digital platforms – The government will consult on the implementation of OECD rules that will require digital platforms to send information about the income of their sellers to both HMRC and the seller themselves. This will help taxpayers in the sharing and gig economy get their tax right, and help HMRC detect and tackle non-compliance.
2.98 OECD Mandatory Disclosure Rules – The government will consult on the implementation of OECD rules to combat offshore tax evasion by facilitating global exchange of information on certain cross-border tax arrangements.
2.99 Tackling promoters of tax avoidance – The government is publishing a summary of responses following the recent consultation ‘Tackling Promoters of Tax Avoidance’. This sets out a package of measures to strengthen existing anti-avoidance regimes and tighten the rules designed to tackle promoters and enablers of tax avoidance schemes.
2.102 Amendment to the Customs and Excise Management Act – The government will legislate in Finance Bill 2021 to introduce a civil penalty for the unauthorised removal of goods that have been seized from the trader’s premises, or ‘in situ’. A penalty will apply to traders removing seized goods without prior authorisation from HMRC. The change will have effect from Royal Assent of Finance Bill 2021.
2.103 Preventing abuse of the Research and Development (R&D) relief for small and medium-sized enterprises (SMEs) – For accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D tax credit that a business can receive in any one year will be capped at £20,000 plus three times the company’s total PAYE and NICs liability, in order to deter abuse
2.104 The government will invest a further £180 million in 2021-22 in additional resources and new technology for HMRC. This is forecast to bring in over £1.6 billion of additional tax revenues between now and 2025-26 by enabling HMRC to:
- invest in IT systems to enable taxpayers to more easily access tax services and update customer accounts digitally and make the collection of tax and payments to taxpayers easier
- recruit additional compliance staff to increase its ability to target non-compliance through illicit financial flows
- carry out initial design and development of Digitalising Business Rates to help modernise the business rates system in England and support more effective analysis and oversight of the collection of the tax
- continue to fund compliance work on the loan charge, historic disguised remuneration cases and early intervention to encourage individuals to exit tax avoidance schemes
2.111 Super-deduction – From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. This upfront super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.
2.112 UK Infrastructure Bank – The new UK Infrastructure Bank will provide financing support to private sector and local authority infrastructure projects across the UK, to help meet government objectives on climate change and regional economic growth. The Bank will:
- be able to deploy £12 billion of equity and debt capital and be able to issue up to £10 billion of guarantees
- offer a range of financing tools including debt, hybrid products, equity and guarantees to support private infrastructure projects
- from the summer, offer loans to local authorities at a rate of gilts + 60 basis points for strategic infrastructure projects
- establish an advisory function to help with the development and delivery of projects
The institution will begin operating in an interim form later in spring 2021. The Bank will be headquartered in Leeds. Further details on the mandate and scope for the Bank are set out in the ‘UK Infrastructure Bank Policy Design’ document, published alongside the Budget.
2.119 Levelling Up Fund prospectus launch – The government is launching the prospectus for the £4.8 billion Levelling Up Fund alongside Budget. The Levelling Up Fund will invest in infrastructure that improves everyday life across the UK, including town centre and high street regeneration, local transport projects, and cultural and heritage assets. The prospectus will provide guidance to local areas on the process for submitting bids, the types of projects eligible for funding, and how bids will be assessed. To ensure that funding reaches the places most in need, the government has identified priority places based on an index of local need to receive capacity funding to help them co-ordinate their applications.
2.123 UK Community Renewal Fund prospectus launch – The government is launching the prospectus for the £220 million UK Community Renewal Fund alongside Budget. This will support communities across the UK in 2021-22 to pilot programmes and new approaches as the government moves away from the EU Structural Funds model and towards the UK Shared Prosperity Fund. Funding will be allocated competitively. To ensure that funding reaches the places most in need, the government has identified 100 priority places based on an index of economic resilience to receive capacity funding to help them co-ordinate their applications
2.124 Community Ownership Fund – The government will create a new £150 million Community Ownership Fund to help ensure that communities across the UK can continue to benefit from the local facilities and amenities that are most important to them. From the summer, community groups will be able to bid for up to £250,000 matched funding to help them to buy local assets to run as community-owned businesses. In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community. This will help ensure that important parts of the social fabric – like pubs, sports clubs, theatres and post office buildings – can continue to play a central role in towns and villages across the UK.
2.138 Help to Grow: Management – The government will offer a new UK-wide management programme to upskill 30,000 SMEs in the UK over three years. Developed in partnership with industry, the programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. Over 12 weeks, and 90% subsidised by government, this programme will equip SMEs with the tools to grow their businesses and thrive.
2.139 Help to Grow: Digital – The government will launch a new UK-wide scheme in the autumn to help 100,000 SMEs save time and money by adopting productivity-enhancing software, transforming the way they do business. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.
2.148 Social Investment Tax Relief (SITR) extension – The government will continue to support social enterprises in the UK that are seeking growth investment by extending the operation of SITR to April 2023. This will continue availability of Income Tax relief and Capital Gains Tax hold-over relief for investors in qualifying social enterprises, helping them access patient capital. This measure will be legislated for in Finance Bill 2021, and a summary of responses to the consultation held in spring 2019 will be published on 23 March.
2.149 R&D tax reliefs – The government will carry out a review of R&D tax reliefs, with a consultation published alongside the Budget. This review will consider all elements of the two R&D tax relief schemes, with the objective of ensuring the UK remains a competitive location for cutting edge research, that the reliefs continue to be fit for purpose and that taxpayer money is effectively targeted. The government is also publishing the summary of responses of the recent consultation on the scope of qualifying expenditures for R&D tax credits across the UK. The government will consider bringing data and cloud computing costs into the scope of relief alongside a number of other policy options and priorities at the wider review.