As the Chancellor has announced a record breaking Budget today (3 March 2021), we outline what this means for co-ops.
Key takeaways include a £150m Community Ownership Fund and an extension to government business support programmes, including the continuation of the furloughing scheme until the end of September and a £5 billion Restart grant scheme for 'non essential' businesses impacted by lockdown. We were also pleased to learn that Social Investment Tax Relief is being extended.
Read on for our initial take on the 2021 spring Budget.
"We know what a difference this will make through our experience leading the Community Shares Booster programme, and we’ve been able to point to its success to demonstrate that community shares work. We’re looking forward to talking to government about how we can help deliver this." she continues.
Using funding provided by Power to Change and the Architectural Heritage Fund, the Community Share Booster programme has provided £2.6 million in matched investments, leveraging in a further £7.3 million directly from the community.
This has been raised by 9,917 investors in 41 local community businesses saving pubs, pools, heritage buildings and other local assets.
Less than 10 years ago, community shares were almost unheard of. Yet since 2012, £155 million has been raised by 104,203 people supporting more than 440 vital businesses – an impressive 92% of which are still trading.
A key difference of the Community Ownership Fund is that it will be UK-wide whilst to date, the Community Shares Booster programme is only available in England, as it's utilising Lottery funding.
Social investment tax relief
Alongside partners such as Big Society Capital, SEUK and others, we’ve been campaigning to save Social Investment Tax Relief.
We’re delighted this has been extended until April 2023, which means investors can continue to claim back 30% of investments from HMRC when they invest in an eligible charity or social enterprise. This includes Community Benefit Societies running community share offers, which of course encourages them to invest more into their community.
The Treasury has said they will be publishing their response to the 2019 consultation on SITR on 23 March 2021. We will continue to work with partners and members to access this tax relief and run successful community share offers.
Covid-19 business support
As expected the majority of the Budget has focused on the economic impact of the pandemic on businesses. We’re updating our business support programme FAQs as more detail emerges, but here is what we know now:
- The Coronavirus Job Retention (furlough) scheme which pays 80% of employees' wages for the hours they cannot work in the pandemic (up to the value of £2500 per month) is to be extended to the end of September.
- A £5bn Restart Grant scheme to help businesses in England reopen after lockdown, with grants of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses, and up to £6,000 for non-essential businesses impacted by lockdown.
- A new UK-wide Recovery Loan Scheme will replace CBILs and BBILs to make loans between £25,001 and £10 million available for businesses of all sizes.
- An extra £300m has been added to the Culture Recovery Fund, with grants for arts, heritage and culture, which formally constituted co-ops should be eligible to apply for.
- The VAT cut to 5% for hospitality, accommodation and attractions across the UK has been extended until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.
- Businesses rates relief for eligible retail, hospitality and leisure sectors in England has been extended.
- £126m for the Kickstart traineeship scheme, which sees government pay employers who give young people work placements, with payments rising from £2000 to £3000 per trainee and a new ‘flexi-job’ apprenticeship.
- The Help to Grow scheme provides £520m into free online courses to help small businesses to develop skills to help their organisation to survive and thrive.
- The prospectus for the £4.8 billion UK-wide Levelling Up Fund, has been published, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22.
Housing tax for co-ops
In last year’s spring Budget we were delighted that our lobbying to ensure that housing co-ops were not caught up in a punitive housing tax scheme known as ‘property enveloping’ was successful.
But this has taken the best part of a year for this to come into force. This means that housing co-ops will not be lumped into together with overseas oligarchs and property developers buying up property in the UK.