Rishi Sunak has today announced the March 2021 Budget. He says it will take the UK “a long time to recover” but he will do “whatever it takes”. The OBR forecast that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.
Below is our brief summary of announcements that will affect your business:
Furlough Scheme
Since March, 700,000 people have lost their jobs and the economy has seen its biggest fall in 200 years. Therefore the furlough scheme has been extended until the end of Sept 2021. There will be no changes for employees – they will still receive 80% of their salary. Employers will be asked to contribute 10% extra in July and 20% in August & September. This means that in July employers will contribute all Pension Costs and National Insurance costs plus 30% of salaries, in August & Sept this will be 40%.
Minimum Wage
The national minimum wage will increase to £8.91 from April 2021
Apprenticeship Kick Start Program
The incentive will double to £3,000
Restart Grant
From April 2021 Grants to help businesses, who have been forced to close, restart trading will be available for non-essential retail of up to £6,000 per premises. For hospitality and personal care this will be up to £18,000 per premises.
Recovery Loan Scheme
Loans to help businesses recover will be available to any size of business with loans available of between £25,000 – £10m. These will be 80% backed by the government
Business Rates
The 100% Business rates holiday will be extended by 3 months to end of 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 who have been able to stay open.
VAT rates for Hospitality
The reduced rate of 5% has been extended to 30th Sept. The rate will then increase to 12.5% to end of March 2022 finally increasing back to 20% in April 2022.
Tax increases
There will be no increase in Tax, National Insurance or VAT. Personal Tax thresholds have been frozen until 2022 when they will increase to £12,570 or £50,270 for higher rate until 2026.
VAT Threshold
This will remain at £85,000 until 2024
Corporation Tax
The rate of Corporation tax will increase to 25% for businesses reporting a profit of above £250,000. Small businesses who report profits of under £50,000 the tax rate will remain at 19%. There will be a tapered rate for businesses reporting profits of between £50,001 – £124,999. Businesses can carry losses back for up to 3 years of up to £2m.
Super Deduction Business Tax
To incentivise businesses to invest, a new Super Deduction Pro Business Tax Regime has been announced allowing businesses to reduce tax by up to 130% – eg; if a construction business invests £10m in infrastructure, currently they can claim £2.6m tax deduction – with the new Super Deduction this will be £13m.
Duties
Duties on Alcohol and Fuel have been frozen
Help to Grow
Management and Developmental training will be available in the Autumn for which the Government will contribute 90%. Digital investment – 50% off software up to £5,000 for small businesses to help them digitise. Full details on the businesses and software eligible for the voucher will be published this summer but you can register your interest here.
This is not an exhaustive list but some key points that we wanted to get out to you quickly.
As Always we are here to help and support you in any way we can!