The pandemic has caused pain for many businesses in the UK, the recent lockdown has meant that most businesses have had to close their doors until June 2021. As predicted the Chancellor Rishi Sunak, has announced further support measures to help businesses and a swifter and more sustained recovery is on the cards.
So, what did the 2021 budget include?
Furlough has been extended to September 2021, this will provide a major boost to businesses affected by the pandemic. Employees will continue to receive 80% of their salary for hours not worked. Find out more about the Furlough scheme.
The self-employed Support Scheme will also be extended through to September 2021. With many self-employed people left out in the cold, those newly self-employed last year will also be entitled to claim the 5th grant (providing they have submitted the latest self-assessment).
Community groups will receive support to purchase local pubs to run them as community-owned businesses. Groups will be able to bid for up to £250,000 match-funding in order to keep local pubs running.
Free management training courses will be available under the ‘help to grow’ scheme, £520m will be invested in online courses from top business schools. Help small businesses develop digital skills with 50% grant for software register here.
Sport has taken a big hit during lockdown, so the Chancellor announced a £300m recovery package as well as cash to launch a 2030 World cup bid.
The Tax threshold will rise to £12,570 (basic rate) and £50,270 (higher rate) and will then be frozen until 2026. The VAT registration threshold will remain at £85,000 until 2024.
Corporation Tax will rise to 25% in 2023, only businesses with profits of over £250,000 will be taxed at this rate. The lower rate of 19% will be retained for businesses with profits under £50,000. For those businesses with profits between £50,000 and £250,000 there will be a taper relief to bridge the gap between the lower and higher rates.
When a company invest, they can reduce their tax by 130% of the cost through the new super deduction scheme in an effort to boost the economy.
The 5% reduced VAT for tourism and hospitality will be extended to September followed by a reduced rate of 12.5% for a further six months.
Business rates holiday will be extended from April to June 2021, for the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses (with a lower cap for those businesses who have managed to stay open).
Stamp duty is being extended to June 2021 with the nil rate band set at £250,000 after this date.
The proposed Fuel duty increase is being cancelled along with a freeze on alcohol duty.
£19m has been set aside for domestic abuse programmes with this being one of the hidden tragedies of the pandemic.
A new UK infrastructure bank will be located in Leeds to finance green investment and infrastructure such as offshore wind projects, it will be set up with an initial capitalisation of £12bn.
Restart grants for non-essential retail businesses will be launched of up to £6,000 whilst hospitality and leisure firms will receive up to £18,000.
Darlington will be home to a new northern treasury campus.
Freeports will be set up in eight regions with different rules to make it easier and cheaper to do business, find out more here.
The National Living Wage will increase in April to £8.91, find out more here.
The Universal credit increase of £20 per week will continue for a further six months.
A recovery loan scheme was launched which will offer loans from £25,000 to £10m up to the end of the year with the Government providing lenders with an 80% guarantee. This will replace the Bounce Back Loan and Coronavirus Business Interruption Loan Scheme.
Help for first time buyers with the return of 95% mortgages backed by a Government scheme.
After a difficult 12 months, the economy is projected to return to its pre-Covid level by the middle of 2022. This budget set out to provide further support, as well as warning businesses about the tax rises which are ahead.
Sean Daniel, Managing Director said “It’s going to take some time for the UK to recover economically from the impact of Coronavirus. This budget has delivered much needed support to businesses whilst being honest about plans to fix the public finances”.
Clear Vision Financial Management are a team of accountants based in Romsey and Poole, if you would like any advice on the 2021 budget, please do get in touch. You can call us on 01794 330025 or email us.