After the Chancellor’s budget announcement we wanted to breakdown the key elements for business owners. So here we go:
Has now been extended until the end of September. Furlough employees will continue to receive 80% of their salary for the hours they don’t work until the 30th September. Employer will not be required to contribute to this amount until July when they will contribute 10% while the government will pay 70%.
Self-Employment Income Support Scheme
A fifth grant, covering May to September 2021, will be made available to qualifying businesses.
Business owners whose turnover fell by 30% or more between April 2020 and April 2021 will receive 80% of three months’ worth of their usual average trading profits, capped at £7,500 in total. Business owners whose turnover fell by less than 30% during this period will receive a grant of 30% of three months’ worth of their usual average trading profits, capped at £2,850 in total. Qualifying businesses will be able to claim the grant from late July.
The details of the fourth grant, which covers February to April 2021, were also confirmed in the 2021 Budget. Qualifying businesses will be able to claim 80% of three months’ worth of their average trading profit, capped at £7,500 in total, from late April.
Qualifying business owners who filed their 2019/20 Self-Assessment tax return by midnight on Tuesday 2nd March 2021 will be able to claim for the fourth and fifth SEISS grants.
5% VAT rate for hospitality industry extended
The reduced VAT rate of 5% for businesses in the hospitality industry has been extended until 30th September. An interim rate of 12.5% will be introduced for these businesses from 1st October 2021 until 1st April 2022, when they will have to begin charging the standard rate of VAT again.
Tax thresholds to be frozen
The Personal Allowance and higher rate tax thresholds will be frozen from April 2022 to April 2026.
The VAT registration threshold will remain at £85,000 until April 2024, while the deregistration threshold will remain at £83,000 for the same period.
Corporation Tax rate set to increase in 2023
In April 2023, the rate of Corporation Tax on company profits will increase to 25% for companies with profits over £250,000. Companies with profits under £50,000 will continue to pay Corporation Tax at the rate of 19%, with profits between those levels taxed on a sliding scale.
Recovery Loan Scheme
The Recovery Loan Scheme will replace the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme. The full details of the scheme are still to be announced but the Chancellor confirmed that it will last until the end of 2021 and the government will provide a guarantee of 80% of the value of each loan.
National Living Wage to increase
The National Living Wage for those aged 25 and over will increase from £8.72 to £8.91 in April 2021.
Businesses in England Only
Restart Grants introduced
Non-essential retail businesses and hospitality, accommodation, leisure, personal care and gym businesses in England will be eligible for a Restart Grant from the government. According to the Budget 2021 report, the grants are designed to provide these businesses with “the cash certainty they need to plan ahead and safely relaunch trading over the coming months”.
The value of each Restart Grant will be up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
Business rates relief
A 100% business rates ‘holiday’ has been in place for eligible retail, hospitality and leisure properties in England since March 2020. The Chancellor announced that this period of 100% relief will end on 30th June 2021.
From 1st July 2021 until 31st March 2022, a 66% discount on business rates will apply to eligible businesses in England. This relief will be capped at £2 million per business for properties that were required to close on 5th January and £105,000 for other eligible properties.
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