Rishi Sunak hailed the ‘swifter and more sustained’ UK economic recovery which is taking place in the UK following the effects of the Coronavirus pandemic during his Budget speech yesterday. He revealed that the UK economy shrank by 10% in 2020 but is expected to rebound with projected annual growth of 4% this year, 7.3% for 2022, returning to ‘pre-Covid levels’ by the middle of next year.
He also highlighted the considerable ongoing difficulties for businesses and individuals.
Here is our summary of the new measures announced to help you and your business at this time, plus the tax increases that have been announced, designed to balance public finances.
Furlough scheme extended until the end of September
Furloughed employees are to continue to receive 80% of their monthly earnings up to £2500, until 30 September 2021. Businesses will be asked to contribute 10% of these payments until 31 July, then 20% during August and September.
New Business Recovery Loans
Once the existing CBIL and BBL schemes come to an end, the Government’s new Business Recovery Loan Scheme will enable businesses of all sizes to borrow between £25,000 and £10million up until the end of 2021.
The scheme launches on 6 April and the finance can be used for any legitimate business purpose, including growth and investment.
Loans will be available through a network of lenders, with the Government guaranteeing 80% of the finance to the lender.
Further grants for the Self-Employed
A fourth grant will be provided to the self employed equating to 80% of average trading profits up to £7500, for three months from February to April 2021. A fifth grant will be provided for the period from May to July, with claims to open late July
These grants have been extended to those entering self employment last year and who have filed their first self assessment tax returns, who can claim grants four and five.
£520m Help to Grow Scheme
The Government is to provide funding for training for SMEs, as well as technology advice and discounted digital software.
This scheme is expected to commence in Autumn 2021, with the Chancellor urging interested businesses to register online.
Business grants for struggling sectors
As part of a new business restart grant scheme, non-essential retain businesses scheduled to reopen first will be paid up to £6,000 per premises. Businesses in the hospitality and leisure sectors, including personal care and gyms opening later, will receive up to £18,000 per premises.
This will replace the current monthly grant system.
In addition, the VAT rate for hospitality businesses will be maintained at the reduced 5% rate until September 2021, with an interim 12.5% rate to apply for the following six months.
New apprentice grant
There will now be double the current cash incentive to businesses who take on apprentices of all ages, with payments rising to £3,000.
There will also be a flexi-job initiative designed to allow apprentices to work with different employers in the same sector.
New visa scheme
A new visa scheme to help start-ups and rapidly growing technology firms source talent from overseas has been announced.
Your Business Tax
Corporation tax rise in 2023
In a move designed to help profitable companies to support companies still struggling, from April 2023, the rate of corporation tax paid on company profits will increase from 19% to 25%.
Companies with profits under £50,000 will remain at 19%, which the Government claims means only 10% of companies will pay the higher rate.
Companies with profits exceeding £50,000 but not £250,000 will pay tax at a ‘tapered’ rate.
Business rates remain reduced
The 100% business rates holiday will continue for the first three months of the fiscal year, through to the end of June 2021.
For the remaining nine months, they will be cut by two thirds.
A discount of a value of up to £2million will be made for businesses which have been forced to closed, while a lower cap will be made for those able to stay open during restrictions.
Introduction of ‘Super-Deduction’ tax relief
In a move to encourage investment into the UK and boost its recovery from the pandemic, from 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim
- a 130% super-deduction capital allowance on qualifying plant and machinery investments
- a 50% first-year allowance for qualifying special rate assets
Your Personal Tax
No changes to rates of income tax, national insurance or VAT were announced.
- The personal income tax allowance is to be frozen at £12,570 from April 2022 to 2026
- The higher rate income tax threshold is to be frozen at £50,270 from 2022 to 2026
- The stamp duty holiday on house purchases in England and Northern Ireland is extended to June, with no tax liability on sales of less than £500,000
- There are no changes to inheritance tax, lifetime pension allowance or capital gains tax allowances