• Haescooper
• Resources
• Budget Summary 2021

Budget Summary 2021

03/03/2021

On Wednesday 3rd March 2021, Rishi Sunak delivered his second budget to Parliament.  The Chancellor began by stating that the Government’s response to Coronovirus was working and that the economy was expected to return to “pre-covid” level by the middle of 2022, however the economy would be 3% smaller in five years’ time than it would have been.

He went on to announce extensions to support schemes such as the furlough scheme, SEISS grants and universal credit uplift, as well as a rise in the national living wage, funding for domestic abuse programmes, and further hospitality and leisure grants.

Main points announced in the Chancellor’s budget

Covid-19 – Support Schemes and Grants

• Furlough scheme extended by five months, to the end of September 2021. Under the scheme, the government pays employees 80% of their wages, up to £2,500 a month, if they are furloughed by their employer. Employers must pay 10% of these wages in July and 20% in August and September.
• Support for the self -employed to continue and also those who have filed a tax return in 19/20 are now also eligible to claim (those filed up to midnight last night). There will now be
  1. a fourth SEISS grant (for Feb – April 2021) at 80% of average profits up to a maximum of £7,500 and
  2. a fifth SEISS grant (for May – July 2021) where people whose turnover has fallen by 30% or more will still receive 80% of average profits and those with a lower fall in turnover will receive a grant of 30% of average profits.
• Universal credit uplift of £20 a week will also go on until September 2021.
• The National Living Wage will rise to £8.91 from April 2021.
• An extra £19m will be provided to support domestic abuse programmes.
• £10m to be provided to support veterans with mental health needs.
• New “re-start” grants given in April 2021 to help business in the hospitality and leisure sector re-open; as follows
  1. non-essential retail businesses will receive grants of up to £6,000 per premises; and
  2. hospitality and leisure businesses will get grants of up to £18,000.
• A new UK-wide Recovery Loan Scheme to be launched to make available loans between £25,001 and £10m, and asset and invoice finance between £1,000 and £10m, to help businesses of all sizes through the next stage of recovery.
• An extension of the Film & TV Production Restart scheme in the UK, with an additional £300m to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
• Business rates holiday extended until the end of June 2021 with 75% discount after that.
• Reduced VAT rate of 5% for hospitality, accommodation and attractions sectors extended to 30th September 2021, following which the rate will go to 12.5% for a further six months to 31st March 2022.
• Nil-rate band for stamp duty will continue to 30th June 2021 (was 31st March 2021)
• There will be a new mortgage guarantee scheme which will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.

Business Taxes

• Corporation Tax rate to rise from 19% to 25% from April 2023, however
  • Companies with taxable profit of less than £50,000 will stay at the rate of 19%; and
  • The rate will be tapered for profits above £50,000 until they hit £250,000, so only 10% of companies are expected to pay the full, higher rate of 25%.
• Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
• Early loss carry back rules for corporation tax extended.
• Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first-year capital allowances. Under this measure, investments in main-rate assets will be relieved by a 130% super-deduction, whilst investments in assets qualifying for special rate relief will benefit from a 50% first-year allowance.
• The temporary £1,000,000 limit for the AIA will be extended by one year. This change will have effect from 1 January 2021 to 31 December 2021.
• The amount of SME payable R&D tax credit that a business can receive in any one year is going to be capped at £20,000 (plus three times the company’s total PAYE and NICs liability) from April 2021.

Income Taxes

• No changes to % rates of income tax or national insurance.
• Basic rate threshold will be raised to £12,570, but then frozen until 2026.
• Higher rate threshold will also be raised to £50,270, but then frozen until 2026.

VAT

• Reduced rate of 5% for the hospitality, accommodation and attractions sectors to continue to 30th September 2021, at which point it will increase to 12.5% until 31st March 2022 and then return to 20% from 1st April 2022.
• VAT registration threshold remains at £85,000 until 2024.

Other

• No changes to inheritance tax or the lifetime pension allowance until April 2026
• No changes to capital gains tax allowances.
• The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.
• Planned increase on alcohol and fuel duties cancelled.
• Increase in the legal limit for single contactless payments, from £45 to £100.
• Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
• Under a new “Help to Grow” scheme, 30,000 small business will be offered management training, free digital technology advice and discounts on productivity software.

If you have any questions about how the budget will affect your personal or business taxes, don’t hesitate to contact us.