Budget 2021 – key points

Furlough Scheme extended

The furlough scheme will be extended until the end of September with a gradual wind down from July. In July employers will contribute 10% of the cost, in August and September employers will contribute 20%.

SEISS payments (Self-employed income support scheme)

The fourth grant covering the period February-April (worth 80% of average 3 months profits capped at £7,500) can be claimed from next month.

The fifth and final grant will be calculated at 80% of average 3 months trading profits if turnover has fallen by 30% or more and payable at 30% of average 3 months trading profits if turnover has fallen by less than 30%.

Newly self-employed people who were previously excluded from support can now claim the SEISS grant for the fourth and fifth grants only. If you filed a tax return for the first time in the 2019-20 financial year you will qualify as long as your tax return was filed by midnight last night.

There is still no additional support for the company directors who pay themselves with dividends.

Kick-start scheme: (https://www.gov.uk/employing-an-apprentice)

The employer incentive has doubled to £3k per apprentice.

Re-start grant:

Non-essential retail businesses will be able to claim up to £6k and hospitality and leisure industries will be able to claim up to £18k. The amount paid will depen on rateable value and these grants will be administered by local councils.

Recovery Business Loan scheme – launching 6th April: (https://www.gov.uk/guidance/recovery-loan-scheme)

CBILS and bounce back loan schemes will be replaced by a new recovery loan scheme which will be 80% guaranteed by the government.

These loans will provide support for businesses to recover and grow following the disruption of the pandemic. Once received, the finance can be used for any legitimate business purpose, including growth and investment.

The scheme launches on 6th April and is open until 31st December.

Term loans and overdrafts will be available between £25,001 and £10m per business.

Invoice finance and asset finance will be available between £1,000 and £10m per business.

Finance terms are up to 6 years for term loans and asset finance facilities and for overdrafts and invoice finance terms will be for up to 3 years.

No personal guarantees will be taken on facilities up to £250k and a borrowers principle private residence cannot be taken as security.

 

Eligibility:

Your business must:

  • be trading in the UK
  • be viable or would be viable if it were not for the pandemic
  • Have been impacted by the coronavirus pandemic
  • not be in collective insolvency proceedings.

 

If your business received support under the existing COVID-19 loan schemes, it will still be eligible for this scheme.

Business Rates Holiday

Retail/Leisure/Hospitality business rates holiday will be extended until 30th June 2021 and discounted by 2/3 until 31st March 2022

VAT

The reduced rate of 5% VAT for the hospitality and tourism sectors has been extended to the end of September after which it will rise to 12.5% until returning to 20% by next April.

The VAT threshold will remain the same at £85k.

Corporation Tax

Will rise to 25% from 1st April 2023 for larger more profitable businesses.  For small businesses with taxable profit of £50k or less corporation tax will remain at 19% and will taper upwards for profits above £50k so the full rate is only payable when taxable profit reaches £250k

Tax treatment of losses

Carry back allowed up to £2m for up to 3 years.

Super-deduction tax allowance (https://www.gov.uk/guidance/super-deduction)

This is a new scheme to encourage companies to invest.

From 1st April 2021 to 31st March 2023 companies investing in qualifying assets will be able to claim:

  • A 130% super-deduction capital allowance on qualifying plant and machinery investments.
  • A 50% first-year allowance for qualifying special rate assets.

 

For every £1 invested companies can cut their tax bill by up to 25pence.

Capital Gains Tax  – surprisingly nothing mentioned.

 HMRC Task force – 1,000 new tax investigators to be funded. If you haven’t previously taken out our tax investigation insurance that covers our fees in the event of an investigation we highly recommend you do so now. It is just £199+vat per year.

Help to Grow Scheme

This will help small businesses in the form of management training through leading business schools and Digital training so that companies can invest in new software which will receive a 50% discount under the scheme. You can register your interest here: www.gov.uk/helptogrow

 Personal Income

The personal tax threshold will rise to £12,570/£50,270 and then be frozen at this level to April 2026.

Inheritance tax will remain the same.

Other items

Contactless payment limit has been raised to £100

Duty on alcohol and fuel frozen

Stamp duty freeze has been extended until 30th June and then the nil rate will apply up to £250k until the end of September, after which it will revert back to £125k

 

 

 

 

 

 

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