Budget 2021

Today, Wednesday 3 March 2021, the Chancellor, Rishi Sunak, delivered the Spring Budget. He emphasised that his budget was prepared in order to protect people’s jobs and livelihoods. Mr Sunak had a 3-step plan for the country following the Coronavirus pandemic;

  • To do whatever it takes to support individuals and businesses,
  • To fix public finances
  • To build the future economy.

Below are some of the announcements, more details will follow in the next few days:

Coronavirus Support

The Job Retention Scheme (Furlough)

  • The scheme has been extended until end of September 2021. Employees will continue to receive 80% of their wage for the period that they are furloughed
  • Employers will continue to contribute towards National Insurance and Pension payments for any furloughed employees until end of June 2021. The government will continue to contribute 80% of the employees wages
  • In July, employers will also need to contribute 10% of the employees wages as well as the Pension and National Insurance contributions, the government will contribute 70% of the employees wages
  • In August and September, the employers contribution will increase to 20% of the employees wages

Self Employed Income Support Scheme

  • An additional fifth and final grant was announced and is available for self-employed individuals, with business profits below £50k. Applications can be made from late July 2021
  • The amount of grant is based on the level of turnover decrease, if turnover decreased by more than 30%, then 80% of monthly average profit will be received. If turnover decreased by less than 30%, then 30% of monthly average profit will be received
  • New self-employed individuals, who have filed their 2019/20 tax return by 2nd March 2021, are eligible for the fourth and fifth grants
  • The temporary Universal Credit uplift of £20 per week is extended until end of September 2021

Other Support for Businesses

  • A new Restart grant will be launched in April 2021, eligible non-essential shops can claim up to £6,000 per outlet and hospitality busineses may claim up to £18k per premises.
  • The Business Rates Holiday for the retail, hospitality and leisure sector will continue into the new tax year, with 100% relief available for the 3 months ending June 2021 and then a discount of 2/3’s for the remaining 9 months
  • The reduced VAT rate of 5% for the hospitality and Tourism industry will be extended until 30 September 2021. From 1 October 2021 to 31 March 2022, an interim rate of 12.5% will be introduced
  • A new Recovery Loan Scheme will be introduced in April, businesses can borrow between £25k and £10m with 80% of the loan backed by the government

 

Personal Tax

  • The Chancellor announced that there will be no increase to Income Tax, National Insurance or VAT rates
  • Individuals tax free Personal Allowance will however be frozen at £12,570 from 6 April 2021 until April 2026
  • The Basic Rate Band for Income Tax will also remain frozen at £50,270 until April 2026
  • Inheritance Tax, Lifetime Pension Allowances and Capital Gains Tax Annual Exemption will all remain frozen until April 2026

 

Business Tax

  • The Corporation Tax rate will increase from the current rate of 19% to 25% in April 2023
    • Companies with profits lower than £50k will continue to pay the 19% rate
    • Companies with profit between £50k and £250k will pay a tapered rate of tax
  • Losses of up to £2m can now be carried back up to 3 years to offset against previous profits
  • A new ‘super deduction’ has been confirmed where 130% of investment costs can be claimed
  • National Living Wage will increase to £8.91 p/h from April 2021.
  • Incentive payments for taking on new apprentices has been doubled to £3,000

 

Other Points

  • The Stamp Duty Holiday on house purchases up to £500k, that was due to end in March, has been extended until 30 June 2021. From 1 July until 30 September 2021 there will be no duty on houses up to £250k
  • First-time buyers may be eligible to apply for 95% mortgages in the new Mortgage Guarantee scheme, where mortgages are backed by the government. Mortgages should be available from April 2021

 

If you have any questions on the announcements, please contact us to discuss.

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