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2021 Budget Update

As many of you may be aware, the 2021 Budget was announced yesterday. 3 March 2021 and we wanted to highlight some of the key points that were mentioned.

Extended Furlough Scheme / Self-employment scheme

The Furlough Scheme has been extended to the end of September.

Employers will be expected to pay 10% towards the hours their staff do not work in July and that will increase to 20% for August and September as the economy begins to reopen.

Grants for businesses in retail, leisure and hospitality to support re-opening

Non-essential retail businesses will be entitled to receive grants of up to £6,000. Those businesses which open later or will be under more restrictions, including hospitality and leisure businesses, will receive grants of up to £18,000. 

Reduced VAT in hospitality extended to 30 September 2021

The 5% reduced rate will continue to apply until 30 September 2021. From 1 October 2021, such businesses won’t go straight back to the 20% rate and instead will pay an interim rate of 12.5% for another six months.

Recovery Loan Scheme to be introduced from April 2021 (replacing BBL and CBILS schemes)

The Recovery Loan Scheme which launches 6 April 2021 and is open until 31 December 2021 ensures businesses of any size can continue to access loans and other kinds of finance once the existing COVID-19 loan schemes close.

  • Term loans and overdrafts will be available between £25,001 and £10 million per business (Finance terms are up to six years
  • Invoice finance and asset finance will be available between £1,000 and £10 million per business (Finance terms will be up to three years)

More information on how and when you can apply along with the criteria for the eligibility can be found on the HMRC website.

Personal Tax Threshold Frozen at £12,570 from 2022 until 2026

We will see the basic rate personal allowance rise as planned to £12,570 from the new tax year in April 2021 and will remain at this level until April 2026.

Corporation Tax will increase from April 2023 to 25% for businesses making over £250k profits (profits under £250k will be taxed at a tapered rate)

Corporation tax rate will be tiered for the first time with firms making an annual profit of £50k or less continuing to pay the current 19% rate. Rates will then be tapered up to £250k profits when companies will pay the new 25% rate from April 2023.

2 Year Tax “Super-deduction” for business investment

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

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest.

Stay safe,

Adderley, Hill & Co Team

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