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Spring 2021 Budget Highlights

Yesterday saw the unveiling of the Spring Budget 2021, including a ‘whatever it takes’ vow from the Chancellor, to support British business through crisis.

Rishi Sunak announced a £65bn boost for Covid-hit businesses and workers, alongside a warning that he will soon begin the ‘painful’ process of repairing the public finances.

We recommend familiarising yourself with the full report and the content contained.

A brief summary of key business changes and notable highlights is compiled below:

Furlough

The furlough support scheme has been extended until the end of September 2021, with no changes to the terms.

Furloughed employees will continue to receive 80 per cent of their salary for hours not worked.

Businesses will be asked to contribute 10 per cent of this amount from July, then 20 per cent of this amount from August.

Self-Employed

The government will maintain support for the self-employed by allowing them to claim a fourth grant, if profits have been reduced by more than 30%, worth 80% of three months’ average trading profits (up to £7,500).

A fifth grant will be available from May.

Those newly self-employed, in the 2019-20 financial year, will also now be eligible to claim these payments.

Small Businesses

£5bn in new grants has been announced to help British businesses reopen when lockdown begins to ease next month.

Non-essential retail businesses will receive grants up to £6,000 per premises.

The impact of restrictions imposed on hospitality, leisure and personal care business has meant that these businesses cannot open as soon as others. They will therefore be eligible for a one off cash grant of up to £18,000.

A new Recovery Loan Scheme will be introduced to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help organisations of all sizes through the next stage of recovery.

Business Rates

The holiday for business rates will continue until the end of June and will be cut by two thirds for the rest of the year.

Apprenticeships

The apprenticeship hiring incentive in England will be extended to September 2021, with an increase of incentive payment to £3,000.

VAT

In an effort to boost hospitality and tourism industries over the Summer, VAT cuts for the ‘hardest hit sectors’ will remain in place until end of September 2021.

It will then rise to 12.5 per cent for another six months, before returning to 20 per cent.

Personal Income Tax

Personal tax allowance and higher-rate tax thresholds will rise in April 2021.

The tax-free personal allowance will rise by £70 from £12,500 to £12,570 in April 2021, and it will then remain there until April 2026. This applies to everyone in England, Scotland, Wales and Northern Ireland.

The higher-rate tax threshold will rise from £50,000 to £50,270 from April 2021, where it will remain until April 2026. This applies in England, Northern Ireland and Wales.

The National Insurance Contribution (NIC) threshold will also rise to £9,568 for the 2021/22 tax year before being frozen.

Corporation Tax

The rate of Corporation Tax on profits will increase from the current level of 19 per cent to 25 per cent, as of 2023.

Businesses with profits of £50,000 or less will continue to be taxed at 19 per cent. A taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25 per cent rate.

Tax ‘Super Deduction’

A new tax ‘super deduction’ policy is to be introduced, to encourage investment into the UK and boost its recovery from the pandemic.

This will come into effect from April 2021 and will last until March 2023.

Companies investing in qualifying new plant and machinery assets will benefit from a 130 per cent first-year capital allowance.

There is also a 50 per cent first-year allowance for qualifying special rate and long life assets, for investing companies.

If you need any advice or help understanding the information above, please feel free to get in touch. 

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A full copy of the Spring 2021 Budget can be accessed via the following link: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/966160/Budget_2021_Print.

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