Budget 2021

Following the Chancellor’s statement, the main points of the Budget April 2021 are set out below

The Corona Virus Jobs Retention (Furlough) Scheme is extended to September

Employees will continue to receive 80% of wages for hours not worked.  The Employer refund however will reduce to 70% in July 2021 and 60% in August and September 2021.

The Self-Employed Income Support Scheme (SEISS) is set to continue with a fourth Grant covering the months of February to April 2021, paying 80% of average profits

A fifth Grant of 80% of average profits will be available from mid July for businesses whose turnover has fallen by 30 percent or more; otherwise the grant will be payable at 30% of average profits.

These grants will be based on the 2019-2020 return and will therefore include those who became newly self-employed after 6th April 2019 and were excluded from earlier payments – provided the tax return was submitted by midnight last night!

The National Minimum Wage will increase to £8.91 from 1st April 2021. 

There will be a new Restart Grant in April, “to help businesses re-open and get going again”;

Non-essential retail businesses will receive grants of up to £6,000 per premises

Hospitality and leisure businesses who are likely to continue to be subject to ongoing COVID restrictions once they re-open will receive grants of up to £18,000

The Recovery Loans Scheme will offer loans from £25,000 to £10m until the end of the year with the government providing lenders with an 80 percent guarantee. 

The programme replaces the Bounce Back Loan and Coronavirus Business Interruption Loan Scheme, which have paid out more than £70bn to British businesses.

The business rates holiday will continue through to the end of June.

Thereafter rates will be subject to a two-thirds discount although it was announced that this would be capped for some businesses.

The 5% VAT rate for hospitality is extended until 30th September.  It will then increase to 12.5%; only returning to the full 20% from 1st April 2022.

The current Stamp Duty Land Tax (SDLT) nil-rate band (£500,000) is extended until June.  At that point it will be reduced to £250,000 until September 2021 at which time it will return to its previous level of £150,000

Planned and announced increase in personal allowance up to £12,570 will go ahead for 2021/22, but will then be frozen until 2026. 

There will be no increase to rates of income tax, National Insurance Contributions or VAT.

Likewise, the Inheritance Tax threshold, Capital Gains Tax Annual Exemption and VAT registration threshold will all remain frozen until 2026

Corporation Tax will increase from April 2023 to 25%;

The current rate of 19% will remain for small companies with profits up to £50,000 with graduated increases up to annual profits of £250,000.

A New Super-Deduction for investment (130%)

Companies Investing in new equipment will be familiar with the Annual Investment Allowance which allows them to claim a 100% deduction from profits, for the cost of new equipment purchased.  The chancellor announced a “super-deduction” would now be available, allowing companies to deduct 130% of the cost of new equipment as an incentive to invest and “unlock” some of their cash reserves.

Conversely, companies reporting losses will from 1st April 2021 until March 2023 be allowed to claim loss relief (up to a maximum of £2m) and offset those losses against profits reported in the preceding 3 years.

Please note this information has been compiled in haste and is for information only.  No liability can be accepted for persons either acting or refraining from action as a result of anything contained in the above.