Our first thoughts on todays budget. As always these thoughts are “hot of the press” from our review of budget documents published today, and as is often the case there will be some loose ends that will clarify over coming days.
As always these thoughts focus on the issues likely to be of interest to our clients, and makes no claim to be comprehensive.
Increasingly, when writing these reviews, we have to pick apart the detail for England versus Devolved Administrations. Except where noted our understanding is the provisions reported on are UK wide.
Covid Business Support
Furlough (CJRS) – extended till September 2021. Employees still funded at 80% of salary
– Full recovery of salary element by Employers for April/May/June. Employers pay NI and Pensions
– 10% contribution Employer / 70% Government in July
– 20% contribution Employer / 60% Government in August and September
Self Employment Income Support Scheme (SEISS) – Grant 4
– 80% of average profits grant, capped at £7,500, for February to April 2021, and claimable late April
– Eligibility requires that 2019-20 Self Assessment return must have been filed
– Per Government “All other eligibility criteria will remain the same as the third grant. Further details will be published in due course”
– The requirement that 2019-20 has been filed moves the grant on a year, bringing those who started Self Employment in 2019-20 into the scheme, having previously been excluded. How this will work in practice is not announced yet
Self Employment Income Support Scheme (SEISS) Grant 5 – New Announcement – covers May to September
– Where turnover fallen more than 30% – 80% grant on average profits, capped £7,500
– Where turnover fallen less than 30% – 30% grant on average profits, capped £2,850
– Claim from late July – details to follow
Restart Grants – new announcement
– Up to £6k per premises for non essential retail
– Up to £18k per premises for hospitality, accommodation, leisure, personal care and gym businesses
– No detail yet on eligibility are rates, but presumably linked to Rateable Value as with previous grants
Business Rates (England only) – for Retail, Hospitality and Leisure, 100% Business Rates Relief for April/May/June 2021, then 66% relief for July 2021 to April 2022.
Taxpayer Protection Taskforce to tackle fraud in Covid support schemes – 1,256 HMRC staff (very precise!)
SSP temporary reclaim scheme for businesses to continue – announcement for withdrawal to follow, date note specified. This scheme allows recovery of two weeks SSP per employee, whereas normally employers would not be able to recover the SSP.
VAT
5% VAT rate for Hospitality Sector extended until end of September 2021, then 12.5% until 31 March 2022
VAT Registration threshold frozen at £85k until 31 March 2024 – this is good news as a reduction in the threshold had been touted
Extension of VAT deferral scheme, allowing spreading of VAT deferred from spring 2021 over 11 payments during 2021/22
Income Tax and NI
Personal Income Tax Allowance and Higher Rate Threshold frozen until April 2026. No change in Income Tax rates
Pension Lifetime Allowance frozen until April 2026
ISA Allowance unchanged at £20k for 2021-22
Home Working – extension till 5 April 2022 on Income Tax and NI exemption on employer provided home office equipment
NI Rates and Thresholds – no announcements
Capital Taxes – IHT and CGT
IHT and CGT thresholds frozen until April 2026
UHT and CGT rates – no announcements regarding rates. Look out for changes in CGT rates in the Autumn Budget though
Corporation Tax & Business Tax Measures
Main Corporation Tax rate increasing to 25% from April 2023.
– Reintroduction of Small Companies rate at 19% where profits less than £50k
– Tapered rate where profits £50k to £250k
– Full rate of 25% where profits over £250k
Super Deduction of 130% for Business Investment by Companies between 1 April 2021 and 31 March 2023 – this appears to apply only to Companies, not Sole Traders / Partnerships. It appears to be an enhanced Capital Allowance for equipment, so is not likely to apply to cars or buildings
Confirmation of extension of Annual Investment Allowance at £1m for 1 January 20921 to 31 December 2021
Temporary extension to loss carry back rules for all businesses (Incorporated and Unincorporated) – three year carry back rather than one
Other Announcements of Interest
Recovery Loan Scheme for Businesses to replace CBILS and BBL – loans between £25k and £10m so not aimed at very small business
Mortgage Guarantee Scheme for home buyers – guarantee on 95% mortgages up to £600k. Not restricted to First Time Buyers, but restricted to main homes only not Buy To Let
Extension of temporary Stamp Duty cut till September 2021
Six month extension of £20/w Universal Credit top up – paid as a £500 lump sum. Universal Credit Minimum Income Floor remains suspended until July
Contactless Payment limit rising to £100
Levelling Up Fund for local investment projects – £4bn over four years, focused on Transport, Regeneration and Culture.
Help to Grow Digital – 50% toward SME investment in productivity software (interesting political point here, this is a useful scheme to counter complaints about businesses having to invest in software for MTDfV and MTDfIT)
Useful Links
HM Government – Full Budget Report
HM Goverment – Budget 2021: What you need to know
HM Government – Build Back Better: our plan for growth
HM Government – Super Deduction – (More detail here)
HMRC – Tax Rates and Allowances
