Spring 2021 Budget Update

Coronavirus support

Furlough scheme

The government has extended the CJRS to the end of September 2021.  Employees within the scheme will continue to receive 80% of their salaries for the hours not worked.  For March, April, May and June the employer will continue to be able to claim the full 80% from the government, this will then be reduced to 70% in July, and 60% in August and September.

Self-employed Income Support Grant

Fourth grant

The fourth grant will be 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500 in total.  The grant will cover the period from February to April and can be claimed form late April. 

To be eligible for the fourth grant you must have filed a 2019/20 tax return.  If you only started trading in 2019/20 you may now be eligible for the fourth grant.

Fifth grant

This will be the final SEISS grant, and will cover the period from May to September.  People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500.  If your turnover has fallen by less than 30% you will receive a grant of 30% of three months’ average trading profits, capped at £2,850.

This grant can be claimed from late July.

Recovery Loan Scheme

From 6th April 201 the RLS will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to provide confidence to continue providing finance to UK businesses.  This scheme will be open to all business, including those who have already received support under the existing Covid-19 guaranteed loan schemes.

More information can be found here

Restart grants

The government will provide “Restart Grants” in England to business with premises that currently pay business rates.  For non-essential retail businesses these grants will be for up to £6,000 per premises.  For hospitality, accommodation, leisure, personal care and gym business, the grant will be for up to £18,000 per premises.

These grants can be claimed via your local council’s website.

VAT

VAT deferral payment scheme

If you took advantage of the VAT deferral on returns from 20th March to 30th June 2020, you can not opt to use the VAT Deferral New Payment Scheme to pat the deferred VAT in up to eleven equal payments from March 2021, rather than in one lumpsum by 31st March 2021.

VAT reduction for the tourism and hospitality sector

The government are extending the temporary reduced rate of 5% VAT for goods and services provided by the tourism and hospitality sector until 30th September 2021.  This will then increase to 12.5%, before returning to 20% on 1st April 2022.

VAT threshold

The VAT registration and de-registration thresholds will remain the same until 1st April 2024.

Loss relief for businesses

Businesses will be able to temporarily carry back trading losses three years (extended from the current one year rule).  Unincorporated businesses and companies that are not members of a corporate group will be able to obtain relief for up to £2 million of losses in both 2020/21 and 2021/22.  This will assist the cash flow of otherwise viable businesses who are currently making a loss due to the restrictions imposed by the pandemic.

Personal tax

Personal allowance and higher rate tax threshold (HRT)

The Personal Allowance for the year to 5th April 2022 will rise to £12,570, and will remain at this level until April 2026.

The Higher Rate Tax Threshold will rise to £50,270 for the year to 5th April 2022, and will remain at this level until April 2026.

National Insurance contributions thresholds

For the 2021/22 tax year the NICs primary threshold/Lower Profits Limit will rise to £9,568, and the Upper Earnings Limit/Upper Profits Limit will rise to £50,270, and will remain at these levels until April 2026.

Capital Gains tax annual exempt amount

This will remain at £12,300 for individuals until April 2026.

Company tax

Corporation tax

For companies with profits over £250,000, the rate of corporation tax will increase to 25% from April 2023.

For companies with profits under £50,000 the rate of corporation tax will remain at 19%.

Companies with profits between £50,000 and £250,000 will pay corporation tax at a marginal rate, between 19% and 25% dependent on the level of their profit.

Super-deduction

From 1st April 2021 until 31st March 2023 companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance, meaning that the company can claim tax relief on 130% of the cost of the asset.

Stamp Duty

Temporary stamp duty cut

The government are extending the residential SDLT nil rate band to £500,000 in England and Northern Ireland until 30th June 2021.

From 1 July 2021 the nil rate bank will be reduce to £250,000 until 30th September 2021, and will then return to £125,000 on 1st October 2021.

Apprenticeships

Employer’s who hire new apprentices

Employers who hire a new apprentice between 1st April 2021 and 30th September 2021 will receive £3,000 per new hire.  This is in addition to the existing £1,000 payment the government provides for all new 16 to 18 year old apprentices and those aged over 25 with and Education, Health and Car Plan.

Help to Grow Schemes

The Help to Grow Schemes will provide access to management training, technology advice and discounted software to improve productivity.

For more information on the Help to Grow schemes and to register your interest please follow the following link

https://helptogrow.campaign.gov.uk/

This article includes advice that is generic in nature and should not be interpreted as legal advice.

For specific tax planning advice please Contact Us.

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