The Chancellor’s annual budget is always pinned in our diary, something to look forward to before the start of the new tax year. But this year I felt an acute sense of nervousness, as it is going to affect so many businesses like ours and across the country.
This blog will be updated as more information comes out. As the tax lecturers always say, the devil is in the detail, and that often takes a few days to come out!
Furlough has been extended to the end of September 2021. The government will continue to fund the full 80% until the end of June. They will taper their support in July, August & September.
From 1st July the government will pay 70% of the 80%. From 1st August to 30th September they will pay 60% of the 80%. Employers will top up the difference. Worked examples are on the Gov.uk website here.
The eligibility criteria has also been amended to included newly employed workers who were on the payroll as of 2nd March 2021. You can make a claim for them from 1st May 2021.
Self-employed income support scheme – SEISS
There’s going to be a 4th self-employed income support scheme (SEISS) grant payable in April, followed by a 5th paid to the end of September. The 4th grant will be another taxable grant paid at 80% of 3 months trading profits capped at £7,500.
A 5th and final grant will be paid up to the end of September. The 5th grant amount will depend on what your turnover is in the 2020-21 tax year compared to the previous year. If it’s reduced by more than 30% you’ll receive 80%, capped at £7,500. If it’s reduced by less than 30% then you’ll receive 30% of 3 months average trading profits, capped at £2,850.
The newly self-employed, who filed returns in 2019-20, will now also be eligible. More detail is yet to come out on this, but we expect the old criteria to still be in place.
Taxes & VAT
Personal allowances will increase slightly next year to £12,570 & £50,270, but will then be frozen to 2026. Despite saying there’s no income tax increase, this effectively creates one.
The VAT registration limit of £85,000 will remain the same to 2024.
From April 2021 the super deduction will reduce companies tax bills by 25p in every £1 spent on new equipment. This is a reason to delay expenditure if you were thinking about buying equipment this month or next.
VAT on hospitality was reduced to 5% last year on everything apart from alcohol. This has been extended to 30th September. Then there will be a 12.5% rate to 31st March 2022 when it will revert to 20%.
As had been widely reported, non essential retail and hospitality venues will be eligible for grants to help them reopen. They will be paid using the rateable values system via local authorities and will replace the monthly grant system. Retail will be paid up to £6,000 / shop & hospitality venues of up to £18,000 per venue. We have more details on the blog, but personal care & leisure facilities will qualify for the higher rates.
Bounce Back Loans & CBILS will finish on 31st March 2021. A new recovery loan scheme will be launched on 6th April which will be 80% backed by the government and allow loans of £25,001 to £10m. There won’t be any personal guarantee on loans less than £250k. There will also be asset and invoice financing available between £1,000 & £10m.
The business rates holiday for non essential retail and hospitality will be extended until 30th June. Businesses which have been forced to close will have a 2/3rds reduction for the rest of the year to 31st March 2022.
As predicted, corporation tax is going to increase to 25% from 2023 for profits over £250,000. Profits under £50,000 will stay at 19% with a marginal rate applied on profits in between.
Stamp Duty Holiday Extension
The £500k stamp duty cut will be extended to 30th June 2021. The transition back to £125k will be smoothed by having a £250k bracket to 30th Sept 2021, when it will revert back.
Help to Grow
This is a great initiative enabling businesses to access high end, MBA-style management training from top business schools. It will also fund 50% discounts on productivity-enhancing software – definitely imaginative! Get more info here – I’ve already signed up to both!
Apprenticeships & traineeships
£126m is being put into traineeships to pay employers who give young people work placements. Up to £3,000 is available per trainee. There is also a flexi-job apprenticeship to allow apprentices to work with a number of different employers in one sector.
£100m has been given to HMRC to create a COVID task force to crack down on fraudsters who have exploited the schemes.
There is a summary page on the Gov.uk website here for a full summary. And also keep checking here as we’ll be updating over the next few days and weeks!