We're pleased to share an overview of the 2021 budget, as announced by Chancellor Rishi Sunak on 3 March 2021. You can read a comprehensive document from the ICPA (The Institute of Practising Accountants) here:
The main points are:
Further support for individuals and businesses impacted by the pandemic: extensions for job retention scheme and self-employed income support grants, business rates relief, 5% VAT rate on hospitality and leisure; new grants and loans announced.
Small increase in Income Tax thresholds for 2021/22, followed by a freeze until 2025/26.
Freeze in pension scheme Lifetime Allowance, Capital Gains Tax (CGT) annual exempt amount and Inheritance Tax (IHT) nil rate band until 2025/26 .
No change to the rates of Capital Gains Tax.
Corporation Tax rate held at 19% until 31 March 2023, after which companies with profits over £250,000 will be taxed at 25%.
‘Super-deduction’ introduced for companies investing in plant and machinery between 1 April 2021 and 31 March 2023.
Trading losses up to £2 million in 2020/21 and 2021/22 eligible for carry back against the previous 3 years’ profits, instead of the usual one year.
Stamp Duty Land Tax ‘holiday’ for the first £500,000 of residential property cost is extended to 30 June 2021, with a further reduction in charges up to 30 September 2021.
We believe that the most interesting points for our clients are:
Furlough Scheme extended until 30 September 2021
You can see the full details of this in our blog post here.
Further Self Employment Grants
There have already been 3 grants for those who are self-employed with a turnover of less than £50,000. The fourth grant, covering February to April 2021, will be claimable from late April at 80% of three months' average profits, capped at £7,500 in total. You must have filled in a 2019/2020 tax return to be eligible for this grant.
A fifth grant, covering the period from May to September 2021, can be claimed from
late July. This will be targeted at those who need it most as the economy reopens.
Those whose turnover has fallen by 30% or more will be eligible for the full grant,
which will be 80% of three months’ average profits capped at £7,500. The fact that the grant covers a five-month period appears to allow for the likelihood that the business will be reopening in that time. Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. Further details will be published in due course.
Recovery Loan Scheme
The Chancellor announced a new ‘Recovery Loan Scheme’. This will provide lenders
with a guarantee of 80% on eligible loans between £25,000 and £10 million, to give
them confidence in continuing to provide finance to UK businesses. This will be open
to all businesses from 6 April 2021, including those who have already received support
under the existing COVID-19 loan schemes.
Payment of deferred VAT
Businesses could defer the payment of VAT that fell due between March and June
2020. Initially, the deferred amount was to be paid in full by 31 March 2021, but
businesses can now apply to pay it by interest-free instalments up to 31 March 2022.
Applications must be made online by 21 June 2021, but if the scheme is applied for
earlier, the payments can be spread over a longer period.
Six more months to repay Bounce Back Loans
Businesses that took out government-backed Bounce Back loans to get through the coronavirus (COVID-19) pandemic will now have greater flexibility to repay their loans, the government has announced.
The Pay as You Grow repayment flexibilities now include the option to delay all repayments for a further six months. This means businesses can choose to make no payments on their loans until 18 months after they originally took them out.
Pay as You Grow will also enable borrowers to extend the length of their loans from six to ten years, which reduces monthly repayments by almost half.
They can also make interest-only payments for six months to tailor their repayment schedule to suit their individual circumstances.
The Pay as You Grow options will be available to more than 1.4 million businesses which took out a total of nearly £45 billion through the Bounce Back Loan Scheme (BBLS).
We encourage you to read the full document for all the details, or of course you can contact us if you need to discuss your personal circumstances with us.