2021 Budget – The Headlines

Budget, Coronavirus, Corporation Tax, HMRC, Personal Tax, Property Tax, VAT,

As we’ve talked about before, today’s Budget was vital for businesses across the UK to be able to plan for reopening. Last week’s roadmap was Step 1, and now we have Step 2.

There was a lot of content, and we’ll be working through it all over the next few hours and days to make sure that we can translate it effectively for you, but thought the headlines now could be useful.

A fuller summary will come out later, with more to follow over the coming days.

Business Support

Coronavirus Job Retention Scheme / Furlough Scheme

  • Extended to the 30th September.
  • Employees still receive 80% of their salary for the hours they don’t work.
  • Employers will need to contribute 10% in July and 20% in August and September.

 Self Employed Income Support Scheme

Two more grants to come.

  • Grant Four – To cover 80% of average profits from February to April. Application dates will be issued from mid-April, giving access to claim from the end of April. This is to allow time for HMRC to process 2020 Tax Returns.
  • Grant Five – To cover the May to September period. The calculation process will change.
    • Those who’ve seen a reduction in turnover of 30% or more can apply for the full 80% grant, as before. Those who’ve experienced a turnover reduction of less than 30% can apply for a 30% grant. This amount should be available to claim from late July.
    • As long as you submitted a 2019/20 Tax Return by midnight last night (2nd March) you will be able to apply for the grants, subject, we assume, to the other original criteria being met. This will include 600,000 self employed who were excluded previously.

Business Restart Grants

  • Non Essential Retail – up to £6,000
  • Hospitality / Leisure / Personal Care – up to £18,000
  • Film and TV Production – £300m through the Cultural Recovery Fund

Business Rates Holiday – Hospitality / Retail / Leisure sectors.

  • Extended to 30th June 2021.
  • Remaining nine months of the year – 2/3rds discount.

Hospitality and Tourism VAT

  • 5% VAT reduction extended to 30th September 2020.
  • Interim rate of 12.5% from 1st October to March 2022.
  • Standard rate applies effective 1st April 2022.

Loss Carry Back Relief 

  • Carry back losses for up to three years, reducing taxes paid in those years.

NEW Super Deductions

  • A new investment allowance to stimulate investment by businesses who may have built cash reserves.
  • Available at 130% for the next 2 years.
  • Deduct 130% of the cost of any investments, for example in equipment, from your profits before the calculation of tax due.

NEW Recovery Loan Scheme

  • Replacing Bounce Back (BBLS) and Coronavirus Business Interruption Loans (CBILS).
  • Available for businesses of any size.
  • Loan amounts £25,000 to £10million.
  • Apply up to 31st December 2021.
  • Government guarantees 80% of the loan value.

Apprenticeship Bonus

  • Doubled to £3,000 per apprentice recruited.
  • Available until 30th September 2021.
  • Also £7million for a new ‘flexi-job’ apprentice programme, allowing apprentices to work for multiple employers.

NEW Help to Grow Schemes

  • Help to Grow Management
    • Management training, including mentoring and peer learning.
    • Government pays 90% of the cost
    • Business pays a maximum of £750
  • Help to Grow Digital
    • Designed to maintain the huge shift to online businesses and help development of digital skills.
    • 50% discounts on hardware and software, up to £5,000 each.

Both schemes start in the Autumn, but you can register your interest now.

Personal Tax and spending

No changes to Income Tax, National Insurance or VAT.

Personal Tax

  • Thresholds will increase in 2022 and remain unchanged until 2026, as follows:
  • Basic rate tax band increases from £12,500 to £12,750 in 2022 and remain in place until 2026.
  • Higher rate tax band increases from £50,000 to £50,270 in 2022 and remains in place until 2026.
  • Inheritance Tax and Pension Lifetime Allowance will stay at current levels until 2026.

Stamp Duty

  • The current temporary increase in the nil rate threshold to £500,000 will be extended to 30th June 2021.
  • The limit will increase to £250,000 to the 30th September 2021.
  • The limit will revert to the original £125,000 from the 1st October 2021.

NEW Mortgage Guarantee Scheme

  • Government will guarantee mortgages of up to 95%.
  • Available from April 2021, with mainly high street banks on board but with others to follow.

Minimum Wage

  • Will increase to £8.91 an hour from April 2021.

Duties

  • No increase in duty on spirits, wine, cider or beer.
  • No increase in fuel duty this year.

Business Tax Rates

Corporation Tax

  • Increases had been rumoured in advance of the speech.
  • Increased Corporation Tax of 25% for businesses with profits over £250,000 from 2023.
  • Businesses with profits below £50,000 will pay the same rate of Corporation Tax as today, 19%.
  • Businesses with profits between £50,000 and £250,000 will taper Corporation Tax rates. Only those beyond £250,000 will pay the full amount.

VAT

  • The VAT threshold will remain  at current levels until 2026.

Additional Announcements

  • HMRC will receive £100million to look for fraud within the Coronavirus Support schemes.

 

As ever, please get in touch if you have any questions!