Budget 2021

Here are the main points from the 2021 budget:

The Job Retention Scheme will be extended until the end of September 2021. The Government will continue paying 80% of employees' wages for hours they cannot work. Employers to be asked to contribute 10% in July and 20% in August and September.

Support for the self-employed will also continue until September.  600,000 more self-employed people will be eligible for help as access to grants is widened to include 2019-20 Tax Return information. The 4th and 5th Self-Employment Income Support Scheme grants will be made available to those who have now filed a Self-Assessment Tax Return for 2019-20 by midnight on 2nd March 2021.

The 5% reduced rate of VAT will be extended until 30th September, followed by an interim rate of 12.5% for another six months.  The standard rate will not return until April 2022.

Business rates holiday extended to June. For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses, with a lower cap for those who have been able to stay open.

Re-opening grants for non-essential businesses of up to £6,000 per premises.

New Recovery Loan Scheme will replace Bounce Back Loan and CBIL schemes.

No changes to rates of Income Tax or National Insurance. Income tax rates set until 2026. On income tax, the threshold for paying the basic rate will rise to £12,570 from 6th April 2021. For higher-rate tax payers, the threshold will be £50,270. Both rates will stay the same until 2026.

Corporation Tax rate to rise to 25% in 2023.  A Small Profits Rate will ensure only businesses with profits of over £250,000 will be taxed at the 25% rate.  Only 10% of all companies will pay the full higher rate. If profits remain below £50,000, then these would continue to be taxed at the current rate of 19%. For profits between £50,000 - £250,000 there will be the complexity of marginal relief between the two rates. 

Corporation Tax losses can now be carried back for a period of 3 years, up to a maximum of £2m.  Historically a company was restricted to carrying back a loss against the profits of the previous 12 months. This relaxation applies for accounting periods ending in the period 1 April 2020 to 31 March 2022.  This would be particularly beneficial for a business which has been impacted by COVID but had previously been profitable. 

VAT registration threshold will remain at £85,000 until 2024.

The National Living Wage will rise to £8.91 from April 2021.

Incentive grants for apprenticeships to rise to £3,000 and £126 for traineeships.

Super Deduction announcement will allow businesses to claim 130% of their new machinery cost as a tax cut for the next two years through to 31st March 2022.

The Stamp Duty £500,000 nil rate band will end on the 30th June. After this date the nil rate band will be £250,000 until the end of September.