2021 Spring Budget
March 4, 2021
As the nation continues to be gripped by the Coronavirus pandemic, we are seeing some light at the end of the tunnel. The mass vaccination roll-out seems to be progressing well and, in addition to the roadmap outlining how the economy is expected to re-open, the Government have now confirmed what support businesses and individuals can expect to receive as we start to return to some form of normality. Whilst this Budget may not go as far as many were hoping for, it does provide some clarity, particularly around ongoing COVID support and how the unprecedented borrowing is expected to be funded over the coming years.
With the announcement of The Chancellor’s Spring 2021 Budget yesterday, we’ve been reviewing all 106 pages of the big ‘Red Book’ (the Budget Bible if you will) to bring you the key points…
List of Services
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Continuing COVID supportList Item 1
- The Coronavirus Job Retention Scheme (Furlough) will provide further support for employees until the end of September 2021. Employees will continue to be paid a minimum of 80% of their salary for hours not worked (up to a cap of £2,500). From July, employers will need to contribute 10% of the total and for August and September this will increase to 20%.
- For sole traders, there will be two further grants available and the great news is that this will be extended to those who were self-employed in the tax year 2019/20 and submitted a self-assessment tax return by 2 March 2021. HMRC will contact eligible individuals in due course - unfortunately we are unable to submit claims on your behalf. As per previous claims, it is expected that at least 50% of your total income must come from self-employment in order to qualify.
- The first will be available in April/May (being 80% of average profits capped at £7,500).
- Final grant is expected in September (this will be tapered based on COVID’s impact on your trading profits).
- A Recovery Loan Scheme will be available from 6 April 2021 with a government-backed guarantee of 80% on loans between £25k and £10m.
- Restart Grants will be available for business premises that were forced to close from 5 January 2021.
- up to £6,000 for non-essential retail premises
- up to £18,000 for leisure, hospitality, accommodation, personal care & gyms
- For business that deferred their VAT payments for the period to June 2020, the repayment that was due on 31 March 2021 can now be spread over a period of up to 11 months. To set up your plan, please click here.
- 5% special VAT rate for tourism and hospitality will remain until 30 September 2021, increasing to 12.5% until 31 March 2022, before returning to 20%.
- Business rates relief will continue at 100% until 30 June 2021 before reducing to 66% relief until 31 March 2022.
- Business tax losses incurred in 2020/21 and 2021/22 can be carried back by up to 3 years (in more normal circumstances it would just be one).
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Tax rate changesList Item 3
- VAT registration & deregistration thresholds will remain frozen for at least the next 2 years. Businesses must register for VAT when their VAT taxable turnover exceeds £85,000 (de-registration threshold is £83,000).
- The annual Personal Allowance will increase from 6 April 2021 to £12,570 (currently £12,500). The higher rate tax threshold will also increase to £50,270 (currently £50,000). There will be no change to the 45% additional tax rate threshold (currently £150,000). It has been confirmed these rates will be frozen until 2025/26.
- The Capital Gains Tax Annual Exemption to remain unchanged at £12,300 and will remain frozen until 2026.
- Inheritance Tax NRB of £325,000 and Residence NRB of £175,000 will remain unchanged and be frozen until 2026.
- For companies, the Corporation Tax rate will remain at 19% until 31 March 2023. It will then increase to 25% for companies with profits in excess of £250,000 and remain at 19% for those with profits below £50,000. For those with profits between these levels, taper relief will apply, meaning tax will be paid at a rate between these two levels. Careful consideration will be required for Owner-Managed Businesses where dividends are used as a means for deriving personal income from a company and from April 2023 any tax savings associated with a limited company may not be considered ‘worthwhile’. These will need to be reviewed on a case by case basis and we would be happy to provide you with a quote in due course if you would like a review and advice in respect of this.
- Annual Investment Allowance for capital expenditure remains at £1,000,000 until 31 December 2021.
- From 1 April 2021 until 31 March 2023 companies investing in qualifying plant and machinery assets will benefit from a a 130% Super-Deduction meaning you can cut your tax bill by up to 25p for every £1 that is invested.
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Other key pointsList Item 4
- The Stamp Duty nil-rate band will remain at £500,000 until 30 June 2021, reducing to £250,000 until 30 September 2021, at which point it will return to £125,000.
- 95% mortgages will be available via a government-backed scheme on Properties with a value of up to £600,000.
- For businesses hiring new apprentices between 1 April 2021 and 30 September 2021 they will receive £3,000 per new hire (previously £1,500 or £2,000 for those aged 24 and under).
- There will be a reform of late filing penalties for VAT and Income Tax which will result in fines being proportionate to the amount of tax owed, as well as how late the tax due is. The timing is expected to coincide with Making Tax Digital (MTD) with further information expected on 23 March 2021.
Video summary of the Chancellor's 2024 Spring Budget
Video summary of the Chancellor's 2023 Spring Budget
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