The last time the chancellor of the exchequer, Rishi Sunak, made his Budget announcement he had been in post for less than a month. What a baptism of fire he has had! 12 months ago, we were all still blissfully unaware of just how devastating the impact of coronavirus would be on businesses large and small together with the wider economy.
Three lockdowns later, and government coronavirus support for individuals and businesses has contributed to an increase of £182.8 billion (or 29.8%) in central government day-to-day spending. This increased spending will need to be recouped at some point, but with the UK still in various states of lockdown many were speculating that increases in taxation will be delayed until next year.
The chancellor has now outlined his spending plans, so what do they mean for you?
COVID-19 support measures
- Recovery Loan Scheme: Lenders will be provided with an 80% guarantee on qualifying loans between £25,000 and £10 million. The scheme is open to all businesses including those that have already received COVID-19 guaranteed loans.
- Restart grants: Worth up to £6,000 for each non-essential retail premises and up to £18,000 for each hospitality, accommodation, leisure, personal care, and gym business. These grants will replace the existing monthly grant system from local authorities and will support businesses as they re-open after the lockdown.
- Coronavirus Job Protection Scheme: This has been extended until the end of September 2021. Employees will be paid 80% of their wages for the hours they cannot work. Employers will be required to contribute to some of the costs from July.
- Self-Employment Income Support Scheme: A fourth grant will be available to those self employed workers still affected by the coronavirus pandemic. Claims can be made from April 2021 for grants worth up to 80% of three months' average trading profits up to £7,500. A fifth grant will cover the period up to the end of September.
- Help to Grow scheme: Businesses will be able to access to free, online MBA-style training and discounts of 50% on productivity enhancing software.
- Corporation tax: From April 2023, the main rate will increase to 25% on profits over £250,000. A small businesses rate of 19% will be introduced for businesses with profits below £50,000. There will be taper relief for businesses with profits between £50,000 and £250,000.
- VAT: The temporary reduction in VAT for hospitality and leisure businesses will be extended until the end of September 2021. It will then increase to 12.5% until 31 March 2022, when it will return to 20%.
- VAT: The registration (£85,000) and deregistration (£83,000) thresholds will remain unchanged from now until 31 March 2024.
- Capital allowances: Companies investing in qualifying plant and machinery will benefit from a new 130% first-year capital allowance or 'Super deduction'. They can also benefit from a 50% first-year capital allowance on qualifying special rate and long-life assets.
- Business rates: Businesses in the retail, hospitality and leisure sectors in England will continue to benefit from 100% business rates relief until 30 June 2021. This will be followed by a period of 66% rate relief for qualifying businesses until 31 March 2022 (capped at £2 million per business).
- Business rates: The multiplier used to calculate business rates has been frozen for 2021/22.
- Loss carry back: The trading loss carry back rule will be temporarily increased from one to three years for all businesses.
- Company vehicles: Fuel benefit and van benefit charges will increase in line with CPI from 6 April 2021.
- Personal allowance: This will rise in line with CPI to £12,570 in 2021/22. It will then be frozen until 2026. The Higher Rate Threshold will also increase to £50,270 from April 2021. It will also then be frozen until 2026.
- National Insurance: NIC thresholds will increase in line with CPI in 2021/22. The Upper Earning Limit/Upper Profits limit will then be aligned with the Higher Rate Threshold until 2026.
- Pensions: The lifetime allowance will be frozen at its current level (£1,073,100) until April 2026.
- Savings: The ISA, Junior ISA and Child Trust Fund subscription limits will remain unchanged in 2021/22. The band of savings subject to the 0% starting rate has also remains unchanged (£5,000).
- Inheritance tax: Current thresholds will be frozen until 2026.
- Capital Gains tax: The annual exempt amount will remain unchanged until 2026.
- Stamp duty land tax: The nil rate of SDLT will be extended in England and Northern Ireland beyond 31 March until 30 June, and nil rate band will then drop from £500,000 to £250,000 until 30 September, returning to the normal level of £125,000 thereafter.
- Vehicle excise duty: This will increase in line with RPI for cars, vans, and motorcycles from April 2021.
- Fuel duty: The planned increase in fuel duty has been scrapped.
- Air passenger duty: Will increase in line with RPI from April 2022.
- Aggregates levy: This has been frozen for 2021/22.
- Sin taxes: All planned alcohol duty increases have been scrapped.
- Freeports: The government have announced the creation of eight freeports across the UK. Businesses in Freeport areas will benefit from more generous tax reliefs, customs benefits, and wider support. The government will legislate for reliefs including business rate reliefs, enhanced buildings and structures relief, stamp duty land tax relief and employer national insurance contribution relief.
- Help to Grow (Management): A new, UK-wide programme will offer subsidised 12-week training programmes to small businesses to enable them up upskill staff.
- Help to Grow (Digital): A new UK-wide scheme will help small businesses adopt productivity-enhancing software with a voucher covering up to half of the costs of approved software and free impartial advice up to £5,000.
- Visas: A new elite, points-based visa will be introduced by March 2022 to enable those with a job offer from a recognised UK scale up to qualify for a fast track visa.
- Apprentices: Employers who hire new apprentices between 1 April 2021 and 30 September 2021 will benefit from a payment of £3,000 per new apprentice.
- Contactless payments: The payment limit on contactless card for a single payment will be increased to £100 and £300 cumulatively in a single day.