COVID19

2021 Budget Update including Furlough and SEISS changes

Posted on by sharon baker

Following last week’s 4 step plan out of Lockdown, we were poised and ready for today’s Budget 2021, as it promised lots more support for jobs and businesses.

 

Here’s our summary, but please join us on Zoom at 8 March 2021 at 10am where we’ll run through everything in human. We will no doubt have more detail by then too.

1. Business and Jobs Support

 

Furlough Extending to 30 September 2021

Check out our detailed blog on how the furlough rules are changing.

  • Employees will receive the same pay as now
  • Employers will be expected to contribute as follows:
    • 10% in July 2021
    • 20% in August and September 2021
    • New employees on the payroll at 2 March 2021 can be furloughed from 1 May 2021

Self Employment Grants 4 and 5

  • To be eligible for the 4th and 5th grants, you must have filed a 2020 tax return by midnight 2 March 2021
    • this means 600,000 self-employed more will now be eligible
  • 4th grant: for the period Feb to April 2021 – 80% of average trading profits, up to £7,500
  • 5th grant: May to September 2021 – based on 3 months average profits, but:
    • if your turnover has fallen by more than 30%, you’ll get the 80% grant
    • if you turnover has fallen by less than 30%, you’ll get 30% of the grant, capped at £2,850

Business Restart Grants

  • Hospitality, personal care, gyms will receive up to £18,000
  • Non-essential retail will receive up to £6,000
  • Film & TV Production – £300m in total through the Cultural Recovery Fund

Business Rates Holiday

  • This will be extended to 30 June 2021
  • 66% discount from July 2021 to March 2022 (if you were required to be closed on 5 January 2021)
  • If you repay your business rates relief this will qualify for income tax and corporation tax relief

Hospitality and Tourism VAT rates

  • The 5% reduced rate of VAT will continue to 30 September 2021
  • Then 12.5% from October 2021 to April 2022

Loss Carry Back Relief

  • Where businesses made losses in 2020/2021 or 2021/22, up to £2 million:
    • Carry back losses to 3 years, instead of one to reclaim business taxes paid in those years

Super Deductions

  • For the next 2 years, there’s a new 130% investment allowance, for investments in equipment etc
  • This means you can deduct 130% of the cost of the equipment from your profits, before working out the tax
  • Find out more about Super Deductions on our latest blog

New Recovery Loan Scheme

  • Businesses of any size can apply for new loans from £25k to £10m
  • Apply up to 31 December 2021
  • Government will guarantee 80% of the loan
  • Asset and invoice finance between £1k and £10m

Apprenticeship Bonus

  • This has been increased to £3,000 for any age apprentice
  • Extended to 30 September 2021
  • Also £7 million for new “flexi-job” apprenticeship programme, so apprentices can work for more than one employer

Training and Growth

  • Help to Grow Management:
    • Management training offered for executive development, including mentoring and peer learning.
    • Government will pay 90%
    • You will be charged £750
  • Help to Grow Digital:
    • Help for small businesses to develop digital skills, with 50% discounts on hardware and software, up to £5,000 each 

  • Register your interest here for both schemes

  • Help for highly skilled migrants, to attract the best talent from overseas

Contactless Payments

  • Increase from £45 to £100

2. Personal Taxes and Spending

Housing

  • Stamp duty land tax  threshold of £500k will continue to June 2021
  • Then £250k from July 2021 to September 2021
  • £125k from 1 October 2021
  • Mortgage guarantee scheme will guarantee mortgages up to £600k with a 5% deposit

Personal Tax Thresholds

    • Basic rate tax band increases from £12,500 to £12,570 in 2022 and will stay til 2026
    • Higher rate increases from £50k to £50,270 in 2022 and will stay til 2026
    • CGT annual exemption frozen at £12,300 until 2026
    • Inheritance tax  and pension lifetime allowance stays the same until 2026

Universal Credit

  • £20 weekly increase will stay until September 2021
  • £500 one-off payment for eligible Working Tax Credit claimants

3. Funding the Spend

The Government will have put £407 billion into supporting businesses and jobs during the COVID crisis, so we need to recoup this somehow.

Here are some measures being put into place:

Corporation Tax Increase

  • For companies with profits over £50k a new 25% CT rate will be introduced in 2023
  • Profits under £50k will remain at 19%
  • Taper relief for profits between £50k and £250k (so you’ll pay between 19% and 25% tax)

VAT

  • The registration threshold of £85,000 is frozen until at least 2024

What’s Next?

These are just the headlines as we’ve got them, but more detail will be released over the coming days, so we will build out more blogs from this page.

We’re also running covering all of this in our Monday Zoom, so do join us! 10am Monday 8 March, and you can register here.

Also keep an eye on our Private Small Biz Facebook Page, for live updates, conversation and a chance to ask questions.

sharon baker