Chancellor Rishi Sunak has unveiled details of the new £65bn budget in the House of Commons. Measures are set out to help business and jobs through the end of the pandemic, support the long-term economic recovery of the UK along with some tax raises to avoid further debt increases.
We have summarised the changes announced in the March 2021 budget below. How these measures impact each business will be different, so please don’t hesitate to ask your AIMS Accountant for more information.
Personal Allowance, basic rate limit, Upper Earnings Limit and Upper Profits Limit
The Personal Allowance will increase to £12,570, and the basic rate limit to £37,700 for 2021 to 2022. The higher rate threshold will increase to £50,270. These thresholds will then remain frozen until 05/04/2026
Changes to the Personal Allowance will apply to the whole of the UK. Changes to the basic rate limit, and higher rate threshold will apply to non-savings, non-dividend income in England, Wales and Northern Ireland, and to savings and dividends income in the UK. Income tax rates and thresholds on non-savings, non-dividend income for Scottish taxpayers is set by the Scottish Parliament.
Starting rate for savings limit
The savings 0% starting rate will remain at its current level of £5,000 for 2021 to 2022.
This measure will apply to the whole of the UK.
Capital Gains Tax Annual Exempt Amount (AEA)
The Capital Gains Tax annual exemption of £12,300 for individuals, personal representatives and some types of trusts for disabled people, and £6,150 for trustees of most settlements, is frozen until 05/04/2026.
The Government announced that Corporation Tax will continue to be charged at 19% until 31/03/2023 after which we will have two rates. A main rate of 25% and a small profits rate of 19% applying to profits up to £50,000. There will be tapering for profits between £50,000 and £250,000 – precise details have yet to be announced.
Carry back of trading losses
Trading losses arising in tax years 2020/2021 and 2021/2022 can be carried back for three years. There are some exceptions, although we are waiting for further detail to be published.
Super-deduction and 50% first-year allowances
Between 01/04/2021 and 31/03/2023, companies investing in qualifying new “main rate” plant and machinery will be able to claim a 130% super-deduction, and “special rate” assets will attract a 50% first-year allowance.
VAT reduced rate for tourism and hospitality
The reduced rate of VAT of 5% for hospitality, holiday accommodation, and attractions is extended to 30/09/2021 after which the reduced rate will increase to 12.5% until 31/03/2022.
SDLT temporary rates
The £500,000 nil-rate band will remain in place until 30/06/2021, it then will reduce to £250,000 before reverting to £125,000 on 01/10/2021.
VAT registration/deregistration limits
The current registration limit (£85,000) and deregistration limit (£83,000) will remain in place until 31/03/2024.
NON-TAX RELATED COVID MEASURES
Coronavirus Job Retention Scheme (CJRS)
The Government furlough scheme has been extended to 30/09/2021.
From July 2021, employers will need to contribute towards the cost of unworked hours:
Until 30/06/2021 0%
01/07/2021 – 31/07/2021 10%
01/08/2021 – 30/09/2021 20%
Self-Employment Income Support Scheme (SEISS)
Further grants for the self-employed have been announced:
The Fourth grant – 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500. The grant will cover the period February to April and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self-Assessment by 02/03/2021to be eligible.
The Fifth grant – 80% of three months’ average trading profits if turnover has fallen by 30% or more, paid out in a single instalment and capped at £7,500. If turnover has fallen by less than 30% the grant is 30% of eligible profits capped at £2,850. The grant will cover the period May to September and can be claimed from late July. Self-employed individuals must have filed a 2019-20 Self-Assessment by 02/03/2021to be eligible for the fifth grant.
Recovery Loan Scheme
From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million. The scheme will be open to all businesses. This replaces the CBILS and Bounce Back Loan schemes.
‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses. Local authorities will get another £425 million of discretionary business grant funding.
Business rates reliefs
Eligible retail, hospitality and leisure properties in England will continue to get 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties.