Next week, the Chancellor of the Exchequer, Rishi Sunak will unveil his plan for the 2021 Budget, in one of the most anticipated outings of the famous red briefcase in years. He is expected to announce a number of measures designed to plug the gap in public finances without stifling the UK’s economic recovery from Coronavirus lockdown restrictions.
Business rates, corporation tax, stamp duty and furlough all look to be part of the agenda with just under a week to go. Yesterday, The Times reported that the stamp duty holiday would be extended to June while multiple sources have mooted a possible rise in corporation tax, bringing the rates up to 23%, matching many other nations.
One area little discussed so far is a change to the Enterprise Investment Scheme, one of the last remaining government backed ways to invest in a tax-efficient way. Previous Budgets have brought with them almost alternating good and bad news for the scheme, with an increase of income tax relief from 20% to 30% leading to a big jump in small business investment and the removal of hospitality as a qualifying sector resulting in a drop in investment.
Many are hoping to see an extension to the Enterprise Investment Scheme, which would undoubtedly boost investment into a wide range of sectors in the growing small business community. This period has seen a big rise in entrepreneurial ambition despite restrictions, with over 800,000 new businesses started in 2020, supporting this growth and drive to expand and hire new employees would provide the fire beneath the UK economy that we are all hoping to see in 2021.
Hospitality used to qualify for investment under Enterprise Investment Scheme, but unfortunately this was scraped. If EIS was extended to hospitality, we would see a huge increase of investment and private equity into the sector, meaning businesses wouldn’t have to take on more debt to survive, giving them a much larger chance of success in the future.
Investment sentiment towards hospitality is also on the rise now that the nation’s lockdown roadmap has been announced. The pent-up demand from this current lockdown is sure to act as a springboard to recovery for a lot of businesses here in the UK. People want to get out and spend, businesses want to grow and investors want to help them do that, it’s a perfect storm for rapid growth. We are seeing this with Rockwater, a hospitality venue in Hove in which we have raised significant investment, with over £1 million of the funding coming from the local community.