Budget Highlights March 2021

It’s Budget Day and although there have been a few spoilers in the press in recent days, here are the top things for business owners to be aware of…….

SEISS

The previously announced fourth grant will now be more widely available as it will include those who filed a return (by midnight on 2 March 2021) for the 2019/2020 tax year.  This also means the calculation period changes for those that have already been eligible.

As before it will be calculated at 80% of your trading profits, averaged over three months, up to a maximum of £7,500.  Remember that for the third grant the eligibility changed, such that you had to demonstrate a reduction in demand.

HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late-April to the end of May 2021.

The scheme has been extended to include a fifth payment for the July-September quarter. The fifth grant has been set at 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more. Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850. Applications are expected to open in late July.

Furlough

The Furlough scheme (CJRS) has been extended until the end of September.  Employees will continue to receive 80% of their pay for the hours they have not worked.  However, businesses will be asked to contribute 10% in July, and 20% in August and September.

The eligibility for the scheme has also been amended. From 1 May 2021, newly eligible employees, who were employed on 2 March 2021, will be included as long as a payment of earnings was reported on RTI between 20 March 2020 and 2 March 2021.

Business Rates

The 100% business rates holiday will be extended until the end of June.  For the remaining nine months of the tax year, business rates will still be discounted by two-thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open during lockdowns due to “essential” status.

VAT

The current reduction for Hospitality and Tourism industry to 5% will be extended to 30 September, then an interim rate of 12.5% for 6 months will apply going back to the standard 20% rate in April 2022.

Freeze on the VAT threshold of £85,000

Recovery Schemes

Restart Grants will be available from April to help businesses re-open, this has been set at amounts up to £6,000 for non-essential retail and up to £18,000 for hospitality and leisure businesses.

Further to the loan schemes previously available during the pandemic, a new Recovery Loan scheme has been announced for businesses of any size.  They can apply for loans from £25k to £10m through to the end of this year with a Government Guarantee of 80%

Company Directors

Nada, nothing…….The DISS proposal put forward by the Forgotten campaign group has not been included in these measures.

Corporation Tax

A new headline rate of corporation tax of 25% was announced. However, this is only relevant for companies making profits greater than £50,000 and does not start until April 2023.  For profits up to £50,000 the rate of tax will remain at 19%.

Companies with profits between £50,000 and £250,000 will pay tax at the main rate of 25%,  reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.

Businesses can carry back losses of up to £2m for up to 3 years.

A new “super-deduction” can be claimed for 130% of costs of qualifying plant and machinery expenditure in the two years from 1 April 2021.

Full information on the budget can be found here.

For any help deciphering the latest budget and what it means for your business do get in contact hello@lualconsulting.co.uk

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Budget