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The 2021 Budget – At a glance

Budget 2021

Here is a 10 minute summary of the Chancellor, Rishi Sunak’s 2021 Budget :

In the Chancellor’s budget today, Rishi Sunak addressed the country, with supportive but realistic measures, to help steer the economy onto the road to recovery.
He went on to say, the amount of financial support needed, being higher in the first and second world wars.

He highlighted a 3 step process, to guide the economy out of the pandemic:

  1. To protect our economy and do what it takes
  2. To fix our public finances, on our way to recovery
  3. To build a robust economy, for the future

Coronavirus Job Retention (Furlough) Scheme extended to 30 September 2021 

If your employees were employed on 30 October 2020, you can claim up to 80% of your employees gross wages, for hours not worked, until July 2021.

For August 2021, employers will need to contribute 10% of the employee’s gross wages.
For September 2021, employers will need to contribute 20$ of the employee’s gross wages.
Employers can make the claims as per usual via your government gateway account.

Self Employment Income Support Grant extended to September 2021

Support for the self employed has been extended also to fall in line with the furlough support measures, for the employed.

A fourth grant will be available for the self-employed, based on 80% of the average 3 month profits, covering February to April 2021. Capped at £7,500, paid in one single payment. Covering
Available from mid April 2021 to 31 May 2021

The fifth grant available from July, will be based on 80% of the average 3 month profits, for those with a turnover reduction of more than 30%.

30% of 3 months average profit, for those with a turnover reduction of less than 30%, capped at £2,850. Covering May to September 2021 and available from late July 2021.

Newly self-employed are now eligible for SEISS forth and fifth grant

If you have just become self employed for the 2019/20 and filed a tax return by 28 February 2021, you are eligible for the fourth and fifth SEISS grant, as mentioned above.
So more people will be eligible for support that slipped through the cracks.

Coronavirus Job Retention (Furlough) Scheme extended to 30 September 2021 

Apprenticeship incentive payments double to £3,000

The cash incentive payment to employers, for hiring an apprentice, has been doubled.Previously if employers took on apprentices aged:

  • 16 to 24 years old, employers would receive £2,000
  • Aged over 24 years, employers would get £1,500

The scheme has been extended to 30 September 2021, and employers will receive £3,000 per hire, regardless of age.

The Restart Grant

The aim of the Restart Grant is to help businesses reopen and get going again.

This new cash grant will see non essential retail businesses, closed due the lockdown, receive up to £6,000 per premises.

Those businesses in the leisure, hospitality and tourism sectors, including personal care and gyms, who will open later, due to restrictions will be able to claim grants, up to £18,000 per premises.

The New Recovery Loan

Even with the new restart scheme some businesses will also need loans to see them through as the bounce back loan, and CBILS come to an end.
The New Recovery Loan, means any businesses of any size can apply for loan from £25,000 up to £10 million, through to the end of this year and the government will provide a guarantee to lenders on 80% of the loan amount.

Apprenticeship incentive payments double to £3,000 for employers

Business rates holiday

100% business rates relief extension, for the first three months of the financial year, to 30 June 2021.
With the remaining nine months, the business rates will be discounted to 2/3 of the amount due, to April 2022.

VAT – 5% reduced rate for hospitality, holiday accommodation and attractions

A 5% reduced VAT rate will be extended for 6 months to 30 September 2021.

From October 2021, there will be an interim VAT rate of 12.5% for another 6 months to 31 March 2022.
From 1 April 2022, the rate will only then return to 20%, for standard rated taxable supplies.
The VAT threshold at £85,000 for compulsory registration remains unchanged.

Stamp Duty Land Tax (SDLT) holiday

The 0% SDLT rate, for property purchases up to £500,000 will be extended from 31 March 2021 to 30 June 2021.
Please note 3% SDLT rate will be added, for additional properties.

There will be a transition phase, from 1 July 2021 to 30 September 2021. Where 0% SDLT rate will apply, for property purchases up to £250,000. 
Then, from 1 October 2021 the 0% SDLT rate will return, for property purchases up to £125,000.

Personal tax thresholds

The Income tax personal allowance, will increase to £12,570 as of April 2022 and will stay at that level until April 2026.
The higher rate threshold, 40% Income tax rate, will increase to £50,270 as of April 2022 and will be frozen until April 2026 
National Insurance rates remain the same.
The Inheritance tax threshold, the pensions lifetime allowance the annual exempt amount for capital gains tax remains unchanged.

Corporation Tax

In an effort to plug the gap in the public finances, the government is looking to business for help 
Chancellor Rishi Sunak said it was “fair and necessary” for business to contribute to the economic recovery.
There will be an increase in corporation tax from the current 19% to 25%, from April 2023.

Corporation Tax – New Small Profits Rate

For businesses with profits of less than £50,000, the current rate of 19% will remain unchanged.

Corporation Tax – Margin relief

For companies with profits between £50,000 to £250,000 will pay tax at 25% but will be able to claim marginal relief.
Profits above £250,000 will be taxed at the new full rate of 25%, from April 2023.

Temporary extension for carrying back losses

Unused tax losses, up to a maximum of £2,000,000 can be carried back 3 years and offset against profits. Claiming additional tax refund up to £760,000.

For Sole Traders:
The losses must have been made in the 2020/21 and 2021/22 tax years to carry back

For Companies:
The maximum amount of £2,000,000 loss which can be carried, applies when the unused loss has been carried back to the previous tax year first.Losses must have been made in accounting periods between, 1 April 2020 to 31 March 2021 and 1 April 2021 and 31 March 2022.

The Super Deduction and 50% first year allowances

Businesses investing in qualifying plant and machinery from 1 April 2021 to 31 March 2023, which are main rate pool assets, will qualify for a 130% Super Deduction

Investments in special rate pool assets, will qualify for a 50% first time allowance.

Sunak said: “Under the existing rule, a construction firm buying £10m of new equipment could reduce their taxable income in the year they invest by just £2.6m. With the super deduction they can now reduce it by £13m. We’ve never tried this before in our country, the [Office for Budget Responsibility] have said it will boost business investment by 10 per cent, around £20bn more per year.”

Businesses investing in qualifying plant and machinery from 1 April 2021 to 31 March 2023, which are main rate pool assets, will qualify for a 130% Super Deduction

Help to grow scheme

The government is offering training and support for SME’s for MBA style management and digital skills training, in an effort to help close the gap with rival nations.
To register your interest:
https://helptogrow.campaign.gov.uk/

If you require any additional information regarding any of the above, please contact us at enquiries@pennyhills.com or call us on 0208 064 0969.

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