It’s safe to say that all eyes were on Rishi Sunak as he stepped up to the despatch box to deliver just his second Budget of his career as Chancellor. As he delivered his Budget last year, no one could have anticipated that a year later, the measures he put in place to try and help the UK get through the Covid-19 crisis would still be at the forefront. But, indeed they were. In this blog, we breakdown the main details from the Budget, which included a few indications as to how the government plan to claw back some of the billions that they have borrowed over the past year.
Once again, the furlough scheme is being extended. It was due to end on 30th April 2021, but has now been extended to 30th September 2021. Currently, the government pay the full 80% due to employees, with the employers just having to pay any employers NI or pension contributions. This will remain the same until 30th June, then for July, employers will be asked to contribute 10%, and then 20% in August and September.
Self Employment Income Support Scheme (SEISS)
This is also being extended to the end of September 2021. The 4th grant will remain the same as the previous grants, 80% of three months average trading profits. The 5th grant will be slightly different- if turnover has fallen by over 30% due to Covid-19, then the full 80% will be payable as with the previous grants. if, however, turnover has fallen by less than 30%, then only 30% of three months average trading profits will be payable.
Crucially, it was announced that 19/20 self assessment returns can now be used (providing they were submitted to HMRC by midnight on 2nd March 2021). This means that 600,000 people who had previously been excluded, due to not having had to complete self assessment returns prior to 19/20, will now be able to claim.
Universal Credit and National Living Wage
The £20/week UC uplift will also continue for the next 6 months.
The NLW will increase to £8.91 from 6th April 2021.
Grants for businesses, rates relief and new loan scheme
There will be a new Restart Grant from April to help with the reopening of businesses after lockdown. Grants of up to £6k/premises will be available for non essential retailers, and grants of up to £18k/premises will be available for other businesses that are forced to stay closed for longer, such as hospitality and leisure.
The current business rates relief of 100% will remain in place until the end of June. From July until the end of the year, the relief will then be cut to 66%.
With the Bounceback Loan and Coronavirus Business Interruption Loan schemes coming to an end, a new Recovery Loan Scheme will take their place, with businesses of any size being able to apply for loans from £25k-£10m until the end of the year. The government will guarantee up to 80% of the loan.
The current reduced rate of VAT at 5% will remain in place until the end of September for hospitality and tourism. From October it will increase to 12.5% for 6 months, whereupon it will then return to 20% from April 2022.
The VAT registration threshold will remain at £85,000 until at least 2024.
– The Stamp Duty cut (on properties up to £500k) will be extended to the end of June 2021. The nil threshold will then be increased from the usual £125k to £250k from July until October 2021, when it will revert to the standard £125k threshold.
– Mortgage guarantees to be introduced to allow 5% deposit mortgages to be backed by the government, with 95% mortgages available from April 2021.
– Planned increases in fuel and alcohol duties have been cancelled.
– Business losses up to £2million can be carried back up to 3 years.
– A new ‘Super Deduction’ for tax has been announced, where, for the next 2 years, companies investing in eligible plant and machinery will receive a 130% super deduction capital allowance for tax purposes.
So, the question is… how is the government going to start paying back some of the £355billion that has been borrowed this year?
The personal tax free allowance will rise by £70 to £12,570 from 6th April 2021. This will however then be frozen until 2026.
The higher rate tax threshold will rise by £270 to £50,270 from 6th April 2021, and will also be frozen until 2026.
The Inheritance Tax threshold, Capital Gains Tax free allowance, tax-free dividend allowance, annual pension allowance and Business Asset Disposal Relief (previously Entrepreneurs Relief) all remain unchanged.
Corporation Tax will remain at 19% until 2023. From 2023, the rate of corporation tax charged will depend on business profits.
Profits up to £50k will have a rate of 19% corporation tax applied, tapering up to a rate of 25% for profit over £250k.
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