The Budget 2021 – APH Accountants
It seems crazy to think this time last year we were all sitting in our offices, or serving our food and drink, or planning the next big event etc etc when Rishi announced his first budget containing some, what can now only be described, as tiny support packages/grants for Coronavirus affected businesses.
One year on and many business support announcements and newsletters later, and we have further substantial extensions of support for Coronavirus affected businesses to add to the already enormous support given over the past year and now also a start on how all the money borrowed for the support packages are beginning to be repaid.
We could never have imagined this is where we would be one year later, but, here we are. We are all hoping this is the beginning of the end. We are proud to have supported our clients as much as we physically could, and we are proud that you have all managed to stay strong and survive through the past year, we know for many of you it has not been easy! Here is hoping that this really is the beginning of the end and we can continue to support you as you re open and/or start to resume and get your businesses thriving even more than before.
Back to the budget for now though and Rishi has come good for the majority of us sticking to his aim of helping us through this pandemic with (he still missed of company directors though)
- Self-employed Income Support Scheme (extension)
- Coronavirus Job Retention Scheme Extension (Furlough Scheme)
- Corporation Tax
- Reduced rated VAT (hospitality extension)
- Income tax and National Insurance
- Restart Grants for business
- Business Rates Holiday (extension)
- Stamp Duty cut (extension)
- Minimum wage
- Universal credit
- Other announcements
Self Employed Income Support Scheme – Extended
The fourth grant will cover February to April 2021 and will take into account your 2019/20 self-assessment return you will receive 80% of trading profits averaged over 3 months. The same criteria applies for this grant as previous grants. You will be able to make the claim for the fourth grant next month.
A further fifth grant will be available to cover May to July 2021 this will be open late July 2021.
The amount you receive will depend on your loss of income. If your income has reduced by 30% you will receive 80% of profits averaged over 3 months. Income which has reduced by less than this can apply for 30% of trading profits averaged over 3 months
Furlough Scheme Extended to 30 September 2021
The government will continue to pay 80% of employees wages for the hours they can not work. With the employer paying any national insurance and pension contributions
Employers will then be asked to contribute an additional 10% of in July with the government contributing 70%.
This will rise again to 20% in August and September with the government contributing 60%
For periods from 1 May 2021 onwards, employers will be able to claim for eligible employees who were on employers’ PAYE payrolls on 2 March 2021. This means they must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying us of earnings for that employee
For those with staff on flexible furlough please see our earlier newsletter or visit the blog section on our website for more details. In a nutshell though we need to know an employee’s normal number of work hours and how many hours they have worked part time in order to calculate the claim. I am sure Helen has you well versed in what she needs by now. Provide all the information as requested to ensure the process is a trouble free as possible.
Remember you must keep your records of which staff were furloughed, when and for how long for at least 5 years. No doubt HMRC will be asking for these records soon. IN THE MEANTIME, WE REMAIN COMMITTED TO MAKING YOUR FURLOUGH CLAIMS ON YOUR BEHALF FREE OF CHARGE BUT PLEASE HELP US TO HELP YOU BY PROVIDING US WITH DETAILS THAT AFFECT YOUR CLAIM AS SOON AND AS ACCURATELY AS POSSIBLE
Corporation Tax rate
One of the big announcements in the budget was that Corporation tax rates would rise from 19% to 25% in April 2023. That’s a substantial rise for most businesses, and more than the anticipated estimates that it may be increased to around 23%.
Fortunately, however there is some relief for small businesses. The 25% rate will only be levied on businesses with more than £250,000 profit.
If your Company’s profits are below £50,000 then corporation tax will stay at the current rate of 19%.
Between £50,000 and £250,000 the corporation tax rate will be tapered and you will pay between 20-24% corporation tax dependent on the level of profits you make.
Corporation tax losses
For company’s with accounting periods ending between 1st April 2020 and 31st March 2022, any losses incurred in those periods can now be carried back to offset against profits of the previous 3 years.
This will reduce the corporation tax owed for the previous periods resulting in a refund of corporation tax to the business (losses are normally only allowed to be carried back 1 year).
Any business (Ltd Co’s) that has suffered significant losses during the above period and that may be more than the total profits of the previous year will be allowed to offset against 2 more previous years in order to relieve the losses even more fully and obtain a greater refund of corporation tax to help with cash flow.
(NB: this loss carry-back extension also applies to self-employed businesses).
VAT (Hospitality and Tourism reduced Rate VAT extension)
For businesses in the Hospitality and Tourism sectors who have benefitted from being able to charge reduced rate 5% VAT on their income since July last year, this was due to end on 31st March.
However some good news as the 5% rate for these businesses is this has now been extended to September 2021.
Following this there will be a further 6 month period where the VAT rate will at 12.5%, until March 22.
From 1st April 2022 the normal 20% rate will resume
So all in all this means an extra year of reduced rated vat for qualifying businesses.
Income Tax and National Insurance
Slightly indifferent news on income tax and national insurance. On the plus side there are no planned increases in income tax or national insurance rates, and the personal tax-free allowance will be slightly increased to £12,570 (from £12,500) from the next tax year as well as the higher rate tax threshold increasing to £50,270 (from £50,000).
However, on the down side these will then be frozen at these thresholds until 2026! Which effectively means once inflationary rises in salaries are taken into account more of our income will be taxed.
You have probably read about this so called stealth tax in the news over the last week as this was an anticipated move by the government. It wasn’t anticipated that he would first raise those thresholds slightly before freezing them but to be quite honest a £70 rise in the personal tax allowance covering the next 5 years is neither here nor there.
Restart Grants for Business
Almost 700,000 small business owners including those running shops, pubs, clubs, hotels restaurants, gyms and hair salons are set to benefit from the scheme.
Non-essential retail businesses will get up to £6,000 per premises through the scheme to help them reopen. In England, shops will reopen no earlier than April 12.
Those due to open later in hospitality, accommodation, leisure, personal care and gyms, can receive up to £18,000, depending on their rateable value.
Criteria to be eligible is as follows:
- Business is based in England Occupies property on which it pays business rates (and is the ratepayer) (even if the rates bill is nil, ie you get a bill but it shows you have nothing to pay)
- Has been required to close because of the national lockdown from 5 January 2021 onwards, or between 5 November and 2 December 2020
- Has been unable to provide its usual in-person customer service from its premises
To apply for this grant you must visit your local council website www.wirral.gov.uk
Business Rates Holiday Extension
The business rates holiday has now been extended until 30 June 2021 with an additional extension from July 2021 to 30 September 2021 will see your rates bill reduced by two thirds of your normal charge
Stamp Duty Extension
This is great news for people wanting to move Rishi announced that he will extend the stamp duty band of £500,000 until 30 June 2021 this means zero stamp duty payable on house purchases up to £500,000.
But he didn’t end there it will be set at £250,000 until 30 September 2021 and then revert back to £125,000 from October.
If you need any advice regarding moving or refinancing your property we can help to put you in touch with a great mortgage advisor so just gives us a call!
New rates for 2021/22 are as follows:
23 and over (NLW) £8.91
21 to 22 £8.36
18 to 20 £6.56
16 to 17 £4.62
Please note if we do your payroll we will automatically apply these rates in April otherwise you will be breaking the law 😊
The Universal credit uplift of £20 per week will continue for another 6 months and an additional one-off payment for eligible working tax credit claimants will be made
- New mortgages guarantee scheme will enable all UK home buyers to secure a mortgage of up to £600,000 with a 5% deposit – Please contact us if this is something you are thinking about.
- A new UK-wide Recovery Loan Scheme to make available loans between £25,000 and £10 million to help businesses of all sizes through the next stage of recovery.
- Extension of the apprenticeship hiring incentive to September 2021 with an increase of payment to £3,000
- Single contactless payment will now increase from £45 to £100, please be careful with Fraud
- Small and medium sized companies are still able to claim up to 2 weeks Statutory Sick Pay (SSP) for each eligible employee from the government.
- £100 million for a new Taxpayer Protection Taskforce to crackdown on COVID fraudsters who have exploited UK government support schemes.
- Fuel duty frozen
- Alcohol duty frozen – thought we would put this one in bold as well 😊!
- ISA investment limit to remain at £20,000 – if you are looking at investing small or large, please call us and we can help to point you in the right direction.
- A new “super-deduction” tax relief was announced for businesses to reduce their tax bill by 130% of what they spend on investment. We assume he is referring to Capital Allowances
- Help to grow scheme aimed at businesses to help with up to 90% government contribution to help with management training 50% towards new software more can be found at gov.uk/helptogrow
With all of the announcements mentioned above finer details will be given over the coming days/weeks. These are the basics of what we know from the budget statement today and we will update further as and when the more intricate details of each is known.
That’s all again for now folks, keep an eye out for further newsletters in the coming weeks on all of this as I’m sure many more issues/details will arise.
Please recommend us or refer us to anyone you know who needs an Accountant or could benefit from our services. At the very least leave us a Google or Facebook review if we have helped you in any way.
As always, please feel free to call Paul, email or whatsapp us anytime for help and assistance on any of this or anything else.
Paul and all the Team at APH