Spring 2021 - Budget Summary for Breweries and Distilleries

When the chancellor announced the 2021 Budget earlier this month there were welcomed allowances for the hospitality sector, however, despite being one of the hardest-hit industries throughout the pandemic, local independent breweries and distilleries have not been prioritised in line with the rest of the sector.

Many of the reliefs announced, such as the extension to reduced VAT rates, will be of no benefit to breweries, distilleries and wet led pubs as the VAT cut does not extend to alcohol sales.

Business rates reductions do not automatically extend to breweries and distilleries who may be required to continue to pay their rates at the full rate, although businesses should contact their local authorities to confirm their particular status.

There were however a few measures announced that may provide some relief to these independent businesses that have been so badly affected over the last twelve months.

Alcohol duty

The government announced that the planned duty increases on beer, cider, wine and spirits have been cancelled and this will be frozen for another twelve months. Although this is not the cut in duty that was hoped for, it does mean that the cost of production of alcohol is not further increased.

Capital allowances ‘super deduction’

The capital allowances ‘super deduction’ is to be introduced from 1st April 2021, which means that any new plant, equipment or machinery a business purchases from that date will be subject to a 130% ‘super deduction’ from their taxable profits. An example of how this would work is as follows:

• Cost of new plant, equipment or machinery addition: £10,000
• Enhanced ‘super deduction’ at 130% : £13,000
• Corporation tax saved on £13,000 at 19% : £2,470

Recovery Loan Scheme

The Recovery Loan Scheme was announced as a replacement to the current Coronavirus Business Interruption Loan Scheme (CBILS) and will open for applications from 1st April 2021. The scheme will allow businesses of any size to access loans of up to £10 million and the government will guarantee 80% of the finance to the lender. It is important to note however that these loans are debt as opposed to any form of grant and will need to be repaid in full.

Furlough

The furlough scheme has been extended to the end of September to help protect jobs in the industry until the economy is fully reopened and breweries and distilleries are back to their pre-pandemic levels of operation. From July, employers must begin to contribute 10% of furloughed staff members’ salaries themselves and from August this increases to 20%.

Restart grants

Breweries and distilleries are not specifically included in the criteria for qualification for the newly announced restart grants, so it will be up to the discretion of local authorities as to which businesses qualify. It will be worthwhile contacting your local authority as soon as possible to check whether your business qualifies in advance of the grants going live in April 2021.