The Budget yesterday was the first since the start of the Coronavirus pandemic and following the end of the transition period arrangement between the EU and the UK.
We were happy to see that there is still significant support out there for businesses that have been hit by the pandemic, albeit unfortunately still minimal help for limited company directors.
The main announcements were:
Furlough has been extended again until the end of September 2021. In July employers will have to contribute 10%, and in August and September they will have to contribute 20%.
Self employed grants
There will be two further Self Employed Income Support Grants covering the period from February 2021 to the end of September 2021. Those who were not eligible for the earlier grants because they commenced self employment during the 2019/20 tax year may be able to claim this time round.
The first grant will cover up to 80% of average trading profits, the final one will only pay out that much if there is a 30% reduction in turnover during that period, otherwise the maximum claim will only be 30% of average trading profits.
In England there is a restart grant for non essential retail businesses of up to £6,000 per premises, and for hospitality, leisure, and personal care of up to £18,000 per premises. The amount of the grants will depend on rateable value.
The current business rates holiday for retail, hospitality and leisure will continue at 100% up to the end of June 2021 with a further two thirds rates cut for closed businesses over the following nine months.
VAT rate for hospitality, hotel and accommodation
The temporary VAT rate cut from 20% to 5% for the hospitality, hotel and accommodation sectors which was due to finish on 31 March 2021 has now been extended for a further six-month period at 5% until 30 September 2021. A new reduced rate of 12.5% will then be introduced, which will end on 31 March 2022.
For those businesses still seeking loans, the Government will guarantee new loans up to 80% up to a maximum of £10 million under the Recovery Loan Scheme.
The new scheme aims to help businesses affected by COVID-19 and can be used for any legitimate business purpose, including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.
Corporation tax to increase
The corporation tax rate will go up from April 2023, from 19% to 25%, for companies with profits exceeding £250,000. Companies with profits of £50,000 or less will continue to pay at 19%. For those in between there will effectively be a sliding scale.
The super deduction will come into effect next month and will end after 31 March 2023. Businesses can claim on qualifying expenditures during that period. The allowance will be 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances. There will be a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for the 6% special rate.
This is a fantastic tax break if you are planning to invest in new equipment. It is worth waiting until April if you had been planning to buy equipment in March.
Carry back of corporation tax trading losses
If your company has made losses then you can take advantage of the temporary extension of carry back of trading losses from the normal one-year entitlement to a period of three years.
There’s a lot to take in. If you want to chat through how this applies to you then get in touch.