Budget 2021
The Chancellor put forward his Budget today (3rd March) in what was one of the most anticipated statements of its type in recent years.
There were rumours of tax hikes being introduced in the short term but it seems these will be phased in, the first of these being an increase to Corporation Tax in 2023. Instead the Chancellor concentrated on further support for businesses and individuals affected by the COVID-19 pandemic.
As with all Budgets, the devil is in the detail and we will provide updates when further information becomes available. The highlights from today’s Budget included:
Furlough Scheme
- Furlough scheme to be extended until 1st September
- No change in terms
- Government will pay 80% of salary for hours not worked
- From July – businesses will contribute 10%
- For August and September – businesses will contribute 20%
Self Employment
- Support for self employed to continue until September
- Fourth grant will be available covering period February to April – 3 months of 80% average trading profits
- There will be a fifth and final grant from May onwards
- Self employed individuals who’s turnover has fallen by 30% or more will receive full 80%
- Self employed individuals who’s turnover has fallen by less than 30% will receive a 30% grant
- Those who became self employed last year and a filed tax return before midnight on 02/03/21 will be able to claim the 4th and 5th grants
Businesses
- For 2 years the VAT registration threshold remains the same (£85,000)
- In April 2023 – rate of Corporation Tax paid on company profits will increase to 25%
- Small business with profits of £50,000 or less will incur a ‘small profits rate’ maintained at current rate of 19%
- A taper system will be introduced above £50,000 with only business with £250,000 profits or greater incurring 25% rate
- Tax treatment of losses made more generous – businesses will be able to carry back losses of up to £2m for 3 years
Low income households
- Universal credit uplift of £20 per week to continue for further 6 months
- Increase in national minimum wage to £8.91 p/h from April 2021
- Incentive payments to businesses hiring apprentices of any age doubling to £3,000
Businesses Grants
- New ‘Restart Grant’ available in April to get businesses going again
- Non-essential retail businesses will open first and receive grants up to £6,000 per premises
- Hospitality businesses including personal care and gyms will open later and will receive grants of up to £18,000
Business investment
- ‘Super deduction’ – for the next 2 years companies making investments into their business will be able reduce their tax bill by 130% of cost
Loans
- Bounce Back Loan Scheme and Coronavirus Business Loan Scheme will soon come to end
- New ‘Recovery Loan Scheme’ to take their place
- Businesses of any size can apply for loans from £25,000 – £10m through to the end of 2021.
- Government will guarantee up to 80% of loan
Business rates
- 100% business rates holiday for retail, hospitality and leisure sector continues for first 3 months of the year to end of June.
- The remaining 9 months these sectors will receive a 2/3 reduction
- Those businesses who can remain open will receive a lower amount
Hospitality and tourism
- To protect jobs the 5% reduced rate of VAT will be extended by 6 months to 30th September 2021
- Following that an interim rate of 12.5% will be put in place for a further 6 months
Individuals
- Income tax, National Insurance and VAT rates to remain the same.
- Personal tax threshold to increase next year to £12,570 and stay at this level until April 2026
- Higher rate tax threshold will increase next year to £50,270 and remain at this level until April 2026
- No change to Inheritance tax threshold, pension lifetime allowance and capital gains
Housing sector
- The Stamp Duty £500,000 nil rate band will now end on 30th June 2021. The nil rate band will then be £250,000 until the end of September 2021
