On 3rd March 2021 the Chancellor announced the Budget. Here we set out some of the key points from the Budget:
The Furlough Scheme will be extended to 30th September 2021, with employees continuing to receive 80% of their normal salary for those hours they do not work. As businesses re-open they will need to contribute towards the Scheme – in July businesses will contribute 10%, and in August and September businesses will contribute 20%.
The Self-Employment Income Support Scheme will also be extended to 30th September 2021. The fourth grant, covering February to April 2021, will provide 80% of a normal three months’ trading profit. The fifth grant, covering May to July 2021 will be based on the impact that COVID-19 has had on your profit. If your profit has been reduced by 30% or more you can again claim 80% of normal three months’ profit; if your profit has reduced by less than 30% you can claim 30% of normal three months’ profit. For both the fourth and fifth grants we await information on the maximum amount of grant available. The fourth and fifth grants will also be open to those self-employed who had not previously been eligible, but who submitted their tax return for 2019/20 before midnight 2nd March 2021.
The Government will double the incentive paid to businesses to £3,000 if they hire a new Apprentice of any age.
A Restart Grant will be available to businesses re-opening after the lockdown. Non-essential retail will be eligible for up to £6,000 per premises, whilst hospitality and gyms will be eligible for up to £18,000. We await further clarification on this new Grant.
There will be a new Recovery Loan Scheme for loans between £25,000 to £10million where the Government will guarantee 80% of the loan. This scheme will be available until 31st December 2021.
The Business Rates holiday provided to retail, hospitality and leisure businesses will continue until 30th June 2021, with discounts available for the period July 2021 to 31st March 2022.
The VAT reduction to 5% for hospitality and tourism businesses will continue until 30th September 2021, after which there will be an interim VAT reduction to 12.5% until 31st March 2022.
Income Tax, National Insurance and VAT will remain unchanged.
The Personal Tax threshold will increase as planned to £12,570 in April, and will then be frozen until April 2026. The Higher Rate threshold will also increase as planned to £50,270 in April, and will again be frozen until April 2026.
Inheritance Tax, Capital Gains Tax, the Pension Lifetime Allowance and the VAT threshold will all remain unchanged until April 2026.
There are significant changes to Corporation Tax from April 2023: those businesses with a profit of up to £50,000 will continue to pay 19% Corporation Tax; those businesses with a profit over £250,000 will pay 25% Corporation Tax; and there will be a tapered Corporation Tax level for those businesses with a profit between £50,000 and £250,000.
The Government is keen to encourage businesses to invest over the next two years, to help the economy grow. Therefore there will be a Super Deduction, where there will be tax relief of 130% of the cost of the investment.
The Stamp Duty Land Tax holiday will continue until 30th June 2021 for those purchasing properties up to £500,000; and the holiday will continue until 30th September 2021 for those purchasing properties up to £250,000.
This is of course a summary of the key points, and as ever the devil will be in the detail!