Spring Budget 2021 - A Summary
Following this afternoon’s Spring Budget statement by the Chancellor we thought it would be useful to provide a summary of the key announcements and measures.
Please bear in mind that the announcement was incredibly recent and further clarity on all points will be provided as further information is made available (and therefore the below should not be relied upon without further consultation), but as a guide the main points are:
Job Retention (Furlough) Scheme
As has been widely reported over recent days, the furlough scheme is to be extended to finish at the end of September.
There will be no change to the amount employees are entitled to receive (being 80% of relevant earnings) however the amounts the government will contribute to businesses will decrease to 70% for July and 60% for August and September.
SEISS
The previously-announced 4th grant scheme (covering Feb – Apr 2021) providing 80% of a 3-month profit average is due to proceed as planned.
Further grant schemes have been announced as part of the budget covering the period from May to September 2021.
The exact periods covered, application dates and qualifying periods are yet to be announced but grants available will vary depending on the impact of Coronavirus on turnover.
For those whose turnover has fallen by more than 30% the rate of grant on the 3-month average profit amount will be 80%.
For those whose turnover has fallen by less than 30% the rate of grant available will be 30% of the average 3-month profits.
Eligibility for the schemes announced today is dependent on the 19/20 self assessment tax return having been filed with HMRC by midnight on 2 March 2021.
Restart Grants
From April the current method of business grant funding will cease to be replaced by Restart Grants.
For non-essential retail (i.e. those currently required to close but planned to reopen on 12 April) will be entitled to grants of up to £6,000 per premises.
For leisure and hospitality (i.e. those currently required to close but planned to reopen on 17 May) will be entitled to grants of up to £18,000 per premises.
As with previous similar schemes we expect these to be administrated by local authorities.
Recovery Loan Scheme
With the cessation of the Bounce Back and CBILS loan schemes remaining on course for 31 March 2021, a new ‘Recovery Loan’ scheme is due to commence from that point.
All businesses will be entitled to apply for loans of between £25,000 and £10m until the end of 2021, with the government guaranteeing 80% of loans made.
Corporation Tax
From April 2023 the main rate of corporation tax will increase from 19% to 25% on profits in excess of £250k per annum.
Those with profits less than £50k will retain the current rate of 19%, with a tapered rate up to the main 25% rate on profits between £50k and £250k to 25%.
An extended losses carry-back option has also been announced to apply until April 2023, whereby up to £2m of losses can be carried back against the profits of the previous 3 years.
A new ‘super-deduction’ has been announced for investment in equipment over the next 2 years, whereby qualifying expenditure will benefit from an enhanced deduction to taxable profits of 130% (i.e. a reduction in taxable profits of £130 for every £100 spent).
Personal Tax
There are no changes to the rates of personal tax (including Capital Gains Tax) in this Budget.
From 6 April 2021 the tax-free threshold will increase to £12,570, where it will remain until 2026.
The higher rate threshold will also increase to £50,270, also remaining frozen until 2026.
Likewise Inheritance Tax, Capital Gains Tax annual exemption and Pension thresholds will remain frozen until 2026.
VAT
The current reduced rate of VAT of 5% for eligible businesses in the tourism and hospitality sectors is to be extended until 30 September 2021.
An intermediate rate of 12.5% will then apply to those businesses until the end of March 2022.
The VAT registration threshold will remain at £85k until April 2024.
Business Rates
The current 100% rates holiday for eligible businesses in the 20/21 year has been extended to the end of June, such that no rates will be payable until that point.
For the remainder of the 21/22 year, eligible businesses will receive a 2/3 discount on business rates.
Stamp Duty
The Stamp Duty nil-rate band extension initially planned to finish on 31 March 2021 has now been extended to cease on 30 June 2021.
From that point the nil rate band will reduce to £250k until the end of September 2021, reverting to the pre-adjustment level of £125k from 1 October 2021.
Mortgage Guarantee
A new ‘mortgage guarantee’ scheme is to be rolled out whereby the government will underwrite 5% mortgages to encourage the purchase of housing and a move away from rental.
Apprenticeship Scheme
The current employer incentive of £1,500 for new apprenticeships is to be doubled to £3,000.
Duty
No change to alcohol or fuel duties.
If you have any questions regarding this or anything else please get in touch, and for regular updates, announcements and news please check our website (www.dsaprospect.co.uk) and make sure you’re following our LinkedIn page: https://www.linkedin.com/company/dsa-prospect-ltd