The long-awaited 2021 Budget announcement from the chancellor had lots of professionals wondering whether it was going to be a compassionate and sympathetic budget, with additional support to continue to help individuals and businesses as we are still currently within a national lockdown, or whether the road to recovery and payback was due to start, to make inroads by tax hikes into the government borrowing that has provided that much-needed support.
Many details as normal appeared to have been “leaked”, however it is always the case to find out the actual facts rather than basing judgment on the news from the media.
See below for the main pointers – it’s likely we’ll be expanding these over the next few weeks to explain the impact of these.
- The Coronavirus Job Support Scheme is to be extended until the end of September 2021, continuing as it currently is being used until July, from when the employer will contribute 10%, increasing to 20% for August and September.
- Corporation tax will increase to 25% from April 2023 for limited companies with profits over £250,000. Small companies with profits under £50,000 will continue to pay corporate tax at 19%, with profits between £50,001 to the £250,000 threshold being charged at a tapered percentage.
- For VAT registered businesses in Hospitality and Tourism, the reduced rate of 5% VAT will continue to September 30th 2021 and then rise to 12.5% for a further 6 months, before reverting to the normal rate of 20% by April 2022.
- Any corporate taxable loss can now be carried back 3 years, meaning a potential tax refund for businesses that were previously profitable,
- The apprentice hiring grant will be doubled from £1,500 to £3,000 for any new apprentice hire of any age.
- A new “re-start” grant to help non-essential businesses to re-open of up to £6,000 per premises and up to £18,000 for those who can only open later
- The current business rates holiday will be extended until June 2021, with a further discounted rate of 2/3rds for the remainder of the year. Businesses that remained open will have a lower cap.
- CBil and Bounce Back loan applications will finish in April and be replaced by a new “Recovery Loan Scheme”, which is available to any business size, offering loans from £25,000 to £10m with the government providing a guarantee of 80%.
- The Self Employed Income Support Scheme will continue to run until the end of Septemer 2021, with a 4th grant for April to June and a 5th from July to September, both at the rate of 80% of average profits.
- However, if sales have fallen by more than 30% or more, the full 80% will be available.
- If sales have dropped by less than 80%, then the grant will be capped at 30%
- newly self-employed individuals who were not eligible before can now claim this 4th and 5th grant as long as they’ve filed a tax return by the 2nd March 2021.
- The universal credit uplift of £20 per week will be extended for another 6 months until the end of September
- The VAT registration threshold will stay at £85,000 until 2024.
- The National Living Wage will increase to £8.91 from April 2021
- There are no planned rises in PAYE, VAT or National Insurance
- The personal allowance will increase to £12,570, and the Basic rate band (before taxes are paid at a higher rate) will increase to £50,570 from April, and remain there until 2026.
- Inheritance Tax, Capital Gain Tax and Pension allowance are to remain the same until 2026.
- The current stamp duty holiday for properties of less than £500,000 will extend until the end of June 2021.
- There are no increases to Fuel duty, nor alcohol duty.
- The contactless limit will increase from £45 to £100.
- There is a new Capital Investment “Super Deduction”, meaning you can claim 130-% of capital assets which will help to fuel investment in growth