03.03.2021: Budget Summary 2021
The much-anticipated Budget has been announced today and we are pleased to set out our summary on some of the points raised.
The CJRS been extended until 30th September 2021 under the same terms until July 2021, so 80% of normal wage with flexi-furlough continuing. From July 2021 employers will be required to contribute to the cost, so they will only be able to claim back 70% and then 60% for August and September 2021 under the scheme.
Self Employed Grants
Whilst it was previously announced that there would be a 4th grant under the scheme, we were awaiting the amount of the grant, which has been confirmed at 80% of average trading profits for the last 3 years up to a cap of £2,500pm. The 4th grant will cover the period February to April 2021 and a 5th (and final) grant will be issued to cover from May onwards as businesses are able to reopen. The 5th grant will be based on turnover figures and how much they have reduced to determine the level of the pay out to be given.
The current grant schemes that are administered by local government will end on 31st March 2021 and be replaced by Restart Grants.
For businesses currently expected to open in April 2021, a grant of up to £6,000 will be available
For businesses currently expected to open in May 2021, a grant of up to £18,000 will be available
We are assuming these will be administered through the local councils again and will take a few weeks at least to be available. Please sign up to their business emails so that you are notified when you can apply.
The Retail, Hospitality and Leisure industries have benefited from a 12-month business rates relief at 100%, this has been extended until 30th June 2021. For the remaining 9 months of the rate year, businesses under these sectors will receive a further 2/3rd reduction.
Reduced VAT – 5%
The lower VAT rate has been extended further until 30th September 2021, this is for the Hospitality and Tourism industries and focuses on on-premises consumption or attendance. There will also be a step increase of an interim rate at 12.5% for 6 months before reverting to the full rate of 10% in April 2022.
The 0% stamp duty holiday for properties under £500,000 in value has been extended to 30th June 2021, this will decrease to £250,000 from July 2021 and then back to £125,000 in October 2021. The government are also issuing a mortgage guarantee for those who are unable to save for more than a 5% deposit, these mortgages are expected to be offered from next month from major banks.
The BBL’s and CBIL’s will stop being available from 31st March 2021 so if you are looking at obtaining one of these please do so ASAP to avoid missing the deadlines. From April the government will offer an 80% guarantee on loans from £25,000 to £10m and these loans will be available until the end of 2021.
Minimum wage rates will increase from 1st April 2021 as previously stated (we will send employers a separate note on the amounts and those affected).
The personal allowance will be increased to £12,570 from April 2021 and the basic rate band will increase to £50,270 from the same period, however these rates will then be frozen until 2026.
Inheritance tax, pension limits, capital gains allowance, NI rates and VAT thresholds have all been frozen as well.
However, the corporation tax rate will increase to 25% from April 2023 for businesses that have profits of over £250,000 in a 12-month period. A lifeline for small businesses will be a small profits threshold of £50,000, with the tax rate remaining at 19% for businesses that have profits below this amount and a taper relief for profits between £50,001 up to £249,999.
Duty rates have also been frozen on alcohol and fuel.
This is just a summary of the main points that the Chancellor stated today, there are other points that we need to investigate further to see how this might help our clients. We will send a more comprehensive update once we are able.
Should you have any questions or require any further support then please do get in touch with the team.
The DA Team