It is hard to believe that one year ago the Chancellor, Rishi Sunak, was giving his first budget and there was no mention of the word ‘furlough’. A matter of hours later the country was officially in the midst of a pandemic which rendered his budget obsolete (almost). The Chancellor delivered his second budget to the House today and below we have outlined the salient points as they affect our clients.
- Furlough – It was leaked beforehand that the furlough scheme will be extended to 30 September 2021 and this was confirmed. Some notable changes though with Employers asked to contribute 10% in July and 20% in August and September.
- SEISS (Self-employed Income Support Scheme) – this is also extended and grants 4 and 5 grants will be made available to those who filed their tax returns by midnight on 2 March. Remember this is for those that do not operate via a limited company.
- VAT – the VAT cut for hospitality firms to be maintained at 5% until September 2021. There will be an interim rate of 12.5% for the six months after before returning to the standard rate of VAT on 31 March 2022. The VAT threshold remains at £85,000 until 2024.
- Business rates – the business rates holiday is extended to 30 June 2021 at the rate of 100% discount. The nine months thereafter the rate goes to 66%.
- The loan support schemes offered by the government such as Bounce Back Loan and Coronavirus Business Interruption Loan Scheme are all closing on 31 March 2021.
- £20 weekly uplift in Universal Credit worth £1,000 a year to be extended for another six months.
- Minimum wage to increase to £8.91 an hour from April 21
- Stamp duty holiday – this has been extended to 30 June 2021 with the first £500k of property value subject to 0% stamp duty (3% if buying property through a limited company or your second property). The threshold will then fall to £250k until 30 September 2021 and then returning to its usual level of £125k in October.
- New homebuyers – the government will provide mortgage guarantees for new homebuyers who cannot afford large deposits with mortgages of up to 95% for home purchases up to £600k
On income tax, the threshold for paying the basic rate will rise to £12,570 next year. For higher-rate payers, the threshold will be £50,270. Both rates will stay the same until 2026. This is effectively a ‘stealth’ tax meaning that it is not a tax rise but in effect is one because it will net an expected additional £6bn for the Treasury.
Please note that the threshold for High Income Child Benefit charge remains at £50,000.
Inheritance tax thresholds, pensions life time allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-26.
The rate of corporation tax is to rise from 19% to 25% from April 2023. Companies with profits of £50,000 or less will be taxed at 19%. The rate will be tapered for profits above £50,000 until they hit £250,000.
Other business points
- Tax breaks for firms to “unlock” £20bn worth of business investment
- Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
- Incentives for firms to take on apprentices to rise to £3,000 and £126m for traineeships
- £5bn in Restart grants for shops and other businesses in England forced to close
- £6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
- New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
- Contactless payment limit will rise to £100 later this year
Other points made in the budget include the following;
- Wine and beer duties frozen
- Petrol duties remain frozen
- A ‘green bond’ will be issued by the government to raise money for environmental projects.
- New UK Infrastructure Bank to be set up in Leeds with £12bn in capital, with aim of funding £40bn worth of public and private projects
- £1bn fund to promote regeneration in a further 45 English towns, including Middlesbrough, Preston, Swindon, Bournemouth, Newark, West Bromwich and Ipswich