On 3rd March, the Government announced its latest, much anticipated budget and we have provided a round up of the highlights below.
Business and Employer Update
• The furlough scheme is extended to September 2021. 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.
• An extension of the Self Employment Income Support scheme (SEISS) to 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 Company Tax will increase to 25% from 2023. Businesses with profits of £50,000 or less will continue to be taxed at 19% and a taper above £50,000 will be introduced so that businesses with profits greater than £250,000 will be taxed at the full 25% rate.
• Restart Grants (distributed by your local Council) will be available in April. 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.
• 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 is being extended until 30 June 2021 for eligible premises, thereafter it will be discounted by two-thirds for the rest of the year.
• Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000 (previously £1,500).
• The availability of incorporated and unincorporated businesses to carry-back trading losses up to three years (rather than just one) will be extended.
This may mean that loss making businesses who previously paid tax on profits in any of the three years prior to the pandemic, may be able to claim a rebate for tax previously paid.
• Companies spending on qualifying new plant and machinery between 1 April 2021 and March 2023 will benefit from new first-year capital allowances. Investments in qualifying assets can be relieved by a 130% super-deduction, whilst investments in assets qualifying for special rate relief will benefit from a 50% first-year allowance. Note that this relief does not apply to second hand assets (they will fall under, slightly less generous, existing rules for relief).
• 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. Little details are available about this new scheme currently.
• 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 throughout, until the end of 2025/26. The higher rate threshold will therefore be £50,270 for these years (currently £50k).
• Inheritance tax thresholds will be maintained at their current levels until April 2026. The nil-rate band will continue at £325,000.
• The Lifetime Allowance for pension pots will be maintained at its current level of £1,073,100 until April 2026.
• The stamp duty holiday on properties worth up to £500,000 will be extended to 30 June 2021 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 will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.
Other Points of Interest and Reminders
The National Minimum Wage increases from 1.4.2021 to £8.91
VAT deferred from Spring 2020; HMRC’s portal to set up a monthly payment plan (interest and penalty free) is now open at https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19 a payment plan must be set up via this service by 30 June 2021 at the latest to avoid penalties. Payment in full can also now been made to settle the deferred amounts.
Bounce back loans – extensions and top-ups still available until 31 March 2021. The maximum amount of loan is the lower of 25% of turnover or £50k. Please contact your bank to arrange an extension or to top-up your loan. Terms remain the same with no interest in first 12 months then fixed rate 2.5% per annum.