The Chancellor has announced the Spring 2021 Budget this afternoon. We have compiled a summary of some of the most important topics below.
Job Retention Scheme (Furlough)The Job Retention Scheme has been extended up to 30th September 2021. Furloughed employees will continue to receive 80%of their usual pay for the duration of the scheme. Up until 30th June 2021, the employers compulsory contribution in relation to furloughed employees will remain limited to the amount of employers national insurance and employers pension contribution. However, in July 2021 employers will be required to contribute 10% of furloughed employees wages, which will rise to 20% in August and September 2021.
Self -Employment Income Support Scheme (SEISS)
This scheme has also been extended. The fourth grant will be available to claim in April 2021 and will cover the months February 2021 to April 2021. This grant will be equal to 80% of average trading profits, up to a total grant cap of £7,500. There will be a fifth and final SEISS grant available to claim from July. For traders whose turnover has dropped by 30% or more, they will remain entitled to 80% of their average profits, with those whose turnover has dropped by less than 30% being entitled to a grant of 30% of their average trading profits if eligible. Newly self-employed individuals, who were not eligible to claim the first three phases of this grant, may now been entitled to receive funding, as HMRC are considering the 2019-2020 self-assessment tax returns to assess eligibility, providing their tax return was filed before midnight on 2nd March 2021.
There will be restart grants available for businesses from April 2021. These grants will be up to £6,000 for businesses in the non-essential retail sector, and up to £18,000 for businesses in the hospitality and leisure sectors, to include personal care businesses and gyms.
The government have also announced further discretionary grants for local English authorities, but have not yet announced anything to mirror this in Wales.
Business Rates Holiday
The business rates holiday will continue up to the end of June 2021. From June 2021, up to the end of December 2021, business rates will be reduced by two thirds, up to a value of £2 million.
Reduced VAT for Tourism & Hospitality
The current reduced VAT rate of 5% for VAT registered business operating in the tourism and hospitality sectors will remain until September 2021. This rate will then increase to 12.5%, before returning to the normal VAT rate by April 2022.
£3,000 grants will be available for each apprentice an employer hires between 1st April 2021 and 30th September 2021. This will be available for all new apprentice hires, regardless of their age.
Stamp Duty Holiday
The current stamp duty holiday has been extended up to 30th June 2021. The stamp duty nil rate band will be reduced from 1st July 2021 up to 30th September 2021. It has not yet been announced whether this will be mirrored in the Welsh Land Transaction Tax rules.
Recovery Loan Scheme
A new loan scheme is being introduced in place of the Bounce Back Loan Scheme and the CBIL scheme. Loans from £25,000 to £10 million will be available up until the end of 2021. The government will provide participating lenders with an 80% guarantee, to increase approval likelihood for businesses.
Personal Tax Thresholds
Income tax, national insurance and VAT rates have been frozen. The personal allowance will rise slightly from 6th April 2021, to
£12,570 (small increase of £70), which will be frozen until 2026. The higher rate income tax threshold has also been frozen until 2026, at£50,270.
Corporation tax rates are set to rise to 25% in 2023. There will be a small profits rate, meaning that companies with profits no greater than £50,000 will still pay tax at 19%. Companies with profits exceeding £250,000 will pay tax at 25%. There will be a tapered tax rate for companies with profits between £50,000 and £250,000.
The Super Deduction f or Equipment
Tax relief of 130% will be available on new equipment businesses acquire during the next two years.
To help more people own their own home, the government want to encourage lenders to offer 5% deposit mortgages. The government will provide guarantees to lenders who will provide 95% mortgages to homebuyers.
Other Notable Points
- Alcohol duties have been frozen.
- Fuel duties have been frozen.
- Minimum wage is to increase to £8.91 an hour from April 2021.
- The £20 per week Universal Credit uplift has been extended for a further 6 months.