On Wednesday, Chancellor Rishi Sunak’s announced his economic plan to help the UK recover from the COVID-19 pandemic.
At Gow & Partners, we have been working hard to get to grips with this new information as quickly as possible, so that we can get our clients up to date with the latest and provide any necessary guidance.
This blog article gives an overview of the Budget as a whole.
The Coronavirus Job Retention Support Scheme (CJRS) has been extended until September 2021. This to support employers across the whole of the UK. The scheme will remain unchanged until July when the government will ask businesses to provide a 10% contribution to employees’ pay, which will rise to 20% in August and September.
Statutory Sick Pay (SSP) will continue. Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee from the Government.
The UK-wide Self Employment Income Support scheme (SEISS) has been extended until September 2021. This will include a fourth grant for three months support at 80% of average profits, continuing until April – then 50% commencing from May onwards, for businesses where turnover has fallen by 30% or more. Businesses, where turnover has fallen less than 30% will receive a 30% grant.
The rate of Corporation Tax will increase to 25% from 2023. Businesses with profits of £50,000 or less will continue to be taxed at 19%, with a taper above £50,000 being introduced, meaning that businesses with profits greater than £250,000 will be taxed at the full 25% rate.
Restart Grants will be brought into play in April. This will follow the end of existing grant programmes in March. Non-essential retailers, which will open first, will receive grants of up to £6,000 per premise; hospitality and leisure business, which will open later and be more heavily impacted by restrictions, will be able to claim up to £18,000.
A UK-wide Recovery Loan Scheme will replace the Coronavirus Business interruption Loans Scheme (CBILS). Through to the end of 2021, businesses of any size can apply for loans from £25,000 to £10 million and the Government will provide a guarantee for 80% to lenders.
The Government will extend the temporarily reduced rate of VAT of 5% for hospitality, holiday accommodation, and attractions until 30 September 2021. This will be followed by the introduction of a new reduced rate of 12.5% from 1 October 2021 that will be in effect until 31 March 2022 at which point it will revert to the standard rate.
Business rates relief gives eligible businesses with property rateable values below £51,000 100% relief. Pubs with a value below £100,000 will get a £5,000 discount.
The apprenticeship hiring incentive in England has been extended until September 2021 and the payment has been increased to £3,000.
The availability of incorporated and unincorporated businesses to carry-back trading losses up to three years (rather than just one) will be extended. A maximum of £2,000,000 of unused trading losses made in each of the tax years 2020 to 2021 and 2021 to 2022 will apply to unincorporated businesses. For corporations, the £2,000,000 maximum applies separately to unused trading losses in relevant accounting periods ending between 1 April 2020 and 31 March 2021 and between 1 April 2021 and 31 March 2022.
Introduction of the super-deduction, companies investing in qualifying new plant and machinery between 1 April 2021 and March 2023 will benefit from new first-year capital allowances. Investments in main-rate assets will be relieved by a 130% super-deduction, whilst investments in assets qualifying for special rate relief will benefit from a 50% first-year allowance.
Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside. The Enhanced rate of SBA of 10% will be made available to the designated tax sites for corporation tax and income tax purposes. To qualify, the structure or building must be brought into use on or before 30 September 2026. Stamp Duty Land Tax relief will be made available for purchases of land or property on these areas, subject to that land or property being acquired and used for qualifying purposes and subject to a control period of up to 3 years.
New Help to Grow schemes. Help to Grow Digital for small and medium-sized businesses will provide free online technology advice and 50% discounts on approved software. Help to Grow Management Training will also cover areas such as marketing and financial management for these businesses.
The income tax Personal Allowance and higher rate threshold will be maintained from April 2022 until April 2026. The 2021/22 increase of the Personal Allowance to £12,570 and basic rate limit to £37,700 will be set to remain for 2022/23, 2023/24, 2024/5 and 2025/26. The higher rate threshold will therefore be £50,270 for these years.
Inheritance tax thresholds will be maintained at their current levels until April 2026. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million.
The Lifetime Allowance will be maintained at its current level of until April 2026. The current level is £1,073,100.
The adult ISA annual subscription limit for 2021-22 will remain unchanged. The limit is £20,000.
There will be a six-month extension of the £20 per week Universal Credit uplift in Great Britain, with the Northern Ireland Executive receiving additional funding to match the increase. A one-off payment of £500 will be made to eligible Working Tax Credit claimants across the UK.
The stamp duty holiday on properties worth up to £500,000 will be extended from the end of March until the end of June and then there will still be no duty on homes worth up to £250,000 for another three months. After that, the threshold returns to the usual level of £125,000 from October.
A new mortgage guarantee scheme is being introduced. This will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.
If you would like a more comprehensive account of the new announcements, then please click the document attached, where you can read our detailed report of the 2021 budget.
If you have any queries regarding the content of this post and what the new budget will mean for you and your business, then please do not hesitate to get in touch.
Simply call our team on 01254 589799 for a friendly and informative chat. Alternatively, you can send us an email at firstname.lastname@example.org.