As Rishi Sunak stood up to present his latest budget, there was much apprehension if this was the year he would start to recoup the generous and much needed support the government has provided as we battled through a locked-down 12 months. We’ve summarised the main take home points:
The CJRS was extended for a sixth time. Instead of ending at the end of April the scheme will remain available until the end of September 2021.
Support will reduce as the economy reopens. Employees will continue to receive 80% of their pay for hours not worked, but employers will have to contribute 10% towards the cost of unworked hours 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.
The eligibility criteria for the fourth SEISS grant were confirmed; the Chancellor also announced a fifth and final grant.
The eligibility criteria for these grants have been updated to take into account 2019/20 selfassessment tax returns, which must have been filed by 2 March 2021, but are otherwise largely unchanged. Some newly self-employed taxpayers who were not eligible for the first three grants will be eligible for the final two grants.
The fourth SEISS grant has been set at 80% of three months’ average trading profits and is capped at £7,500. HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late-April to the end of May 2021.
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.
The temporary increase in the residential SDLT nil rate band to £500,000 in England and Northern Ireland is extended until 30 June 2021. The nil rate band will then reduce to £250,000 until 30 September 2021 before returning to £125,000.
From 1 April 2021, SMEs applying for R&D tax credits will be eligible to a maximum of £20,000 in repayments per year plus three times the company’s total PAYE and NIC liability.
The temporarily reduced rate of 5% VAT for the tourism and hospitality sector will continue until 30 September 2021.
A transitional 12.5% rate will apply for the subsequent six months until 31 March 2022.
The super deduction on investments will come into effect next month and will end after 31 March 2023.
Companies can claim on qualifying expenditures during that period: allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances, and a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for the 6% special rate.
For company owners, the proposed increase in the Corporation Tax rate to 25% from 1 April 2023 may be of concern. However, this rate will only apply once profits hit £250,000; and if profits are below £50,000, the current 19% rate will continue to apply. There will be a sliding scale for profits inbetween.
Personal allowance will rise to £12,570 from April It will subsequently be frozen at this level until April 2026 and no longer adjusted for inflation.
The income tax higher rate threshold will rise to £50,270 from April 2021 and will remain at this level until April 2026. It will no longer be adjusted for inflation.
The starting 0% rate for the savings tax band remains at its current level of £5,000 for 2021/22.
The 0% dividend allowance remains at £2,000.
‘Restart Grants’ are available in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses. More details to follow, but ensure you monitor your local council’s website.
Apprenticeship incentive payments for employers will increase to £3,000 per new hire until September 2021
The new scheme aims to help businesses affected by COVID-19 for any legitimate business purpose, including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford additional debt finance.
The maximum value of a facility provided under the scheme will be £10m per business. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. There will be no turnover restriction for businesses accessing the scheme.
Businesses will be able to choose from a variety of products: term loans, overdrafts, asset finance and invoice finance facilities. Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.