A VAT cut and financial support are top of the small business wish list

The coronavirus pandemic has ravaged UK businesses since the last Budget. Three businesses representing sectors hit hardest — hospitality, non-essential retail and aviation — describe the impact and how they want chancellor to help.

Three Shires Inn

There was no happy new year for James Wilkinson and Tony Guthrie, owners of the Three Shires Inn in the Lake District. On December 30 health secretary Matt Hancock announced that the area was back in lockdown, snuffing out their New Year’s eve trade. 

“Closing down costs a lot of money,” said Wilkinson, 56. “Beer is poured away, food has to be frozen or thrown out. We had two groups of guests arriving after a long journey that day. They were having lunch in Ambleside [five miles away]. We had to call them and tell them to turn round and go home. New Year is 40 per cent of the revenue for December.”

After three enforced closures in 12 months, Wilkinson anticipates a recovery from May 17, the date Boris Johnson said hotels in England can reopen if all goes well. “The phone has not stopped ringing since his speech,” he said.

The Three Shires, in picturesque Little Langdale, has 10 bedrooms and its restaurant is popular with walkers. Wilkinson sold his software business and Guthrie, 50, left his executive job at supermarket J Sainsbury to buy the inn in 2018.

“The support from the government has been very helpful,” said Wilkinson. All nine staff are on furlough, with 80 per cent of their salary paid. Reduced VAT rates — cut from 20 per cent to 5 per cent — have helped offset new costs. Table service means extra staff and social distance has cut the restaurant and bar capacity by a third.

Instead of a forecast £100,000 profit, the Inn has lost £40,000 even after government support. However, it should recoup £25,000 from its business interruption insurance after the Supreme Court ordered insurers to pay out for Covid. An extra “restart grant” of up to £18,000 announced just before the Budget will also help fill the hole.

The pub can serve customers outdoors from April 12, with guests allowed to stay from May 17, so Wilkinson welcomed the Budget extension of furlough until September and the continued reduction in VAT, of 5 per cent until September then 12.5 per cent until April 2022.

With profits below the new £50,000 small business threshold, the increase in corporation tax to 25 per cent from 19 per cent in 2023 will not affect them.

“If anything we think the Budget could have been a little less generous,” said Wilkinson. “There is a lot of government debt to repay. Furlough will support a lot of jobs at companies that must be very weak if they still need to use it in September.”

Simpley Natural

Trisha Sutherns is 72 but not ready to retire. “I’m not going to let Covid knock me out of business. I’m going to fight,” she said. Her Simpley Natural business selling handmade beauty treatments was mushrooming before the pandemic and a third store was planned. Now five staff are on furlough and she relies on online sales, around a fifth of the level last year.

Sutherns, who started the company with her daughter Teresa in Newark, Nottinghamshire, in 2010, praises chancellor Rishi Sunak’s support measures. “Without furlough and the grants I would not have survived. I would have lost my staff.”

Sutherns’s original shop was busier than usual when open last summer. “Local people realised they had to use us or lose us.”

However, her outlet in nearby Sherwood Forest relies on tourists and was quiet. “If we get good weather, good vibrations, we stand a good chance. A rotten summer and if they change the dates ending lockdown and I will worry.” She welcomed a fresh £6,000 per shop grant from government announced before the Budget. But turnover is £55,000 down year on year.

She borrowed £40,000 with a state guaranteed bounce back loan and will invest half in her online operation and repay the rest within months. “Before the pandemic online was a bit of a back-up. I should have realised I really should put money into online sales before.”

She does not pay business rates because her shops are too small, so continued relief does not affect her. But she was “very relieved” furlough was extended though her staff will be back in April. “It’s a safety net if there is another lockdown.”

Sutherns supports the increase in corporation tax for bigger businesses only.

“The Budget was very inspiring for us small business owners. It has given me an upbeat feeling. I am very pleased about fuel tax being frozen because that puts up the price of everything.”

However, Sutherns said big issues had been ignored. “I have got concerns about the NHS and social care. This pandemic has highlighted that they are not that secure and now is the time to address it.”

AM Travel World

The first group to cancel their holiday with Anita Mandl were 30 Americans she was taking to Germany last March. By May she was using her savings to refund customers while waiting to get money back from airlines and hotels.

“People tell me I have a dream job. It has become a nightmare,” she said. “I feel tired all the time and just drained.” 

The first months of lockdown were spent chasing refunds. “There’s an agent in Jordan who still owes me $500. It’s not much but it adds up.”

She has lost around £45,000 in earnings and received £2,000 in support. She cannot claim benefits because of her savings and her husband’s salary. “I have had some handouts from my family. It is really difficult to take that.”

Mandl started AM Travel World in 2014 in Huddersfield, West Yorkshire, and took her accountant’s advice to pay herself partly in dividends. Many other small business owners do the same and Sunak denied them help since dividends are taxed at a lower rate than salaries. “It’s hurtful. I didn’t do it as a tax dodge,” she said.

“I pay corporation tax, national insurance and fill in a self assessment return. You can’t pay yourself a monthly salary because you need to keep money in the business until the end of the year.”

Mandl said Sunak has abandoned her and an estimated 3m other business owners who are ineligible for support.

“I am disappointed,” she said. “Travel is still banned and not going to resume any time soon but there was nothing industry specific for travel.”

Mandl thinks it will be September at the earliest before she earns any money, and yet people who have lost as little as 30 per cent of their income are getting 80 per cent support. “It is baffling.”