On 3rd March 2021, the Chancellor, Rishi Sunak, announced the Budget.
His Budget sets out the financial plan that the Government is going to follow and what this means for individuals and businesses.
For the employed
The furlough scheme (CJRS) is being extended to September 2021 Employees will continue to receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. This will be paid in full by the Government until June 2021. In July 2021, the employer will need to contribute 10% towards the employees’ wages. In August and September, the employer will need to contribute 20% of the employees’ wages.
Personal tax allowance will be frozen between 2022 and 2026 at £12,750.
Higher rate income tax will also be frozen from 2022 to 2026 at £50,270.
There will be no changes to national insurance contributions.
For the Self-employed
The self-employed income support scheme has been extended again. This will also end in September, alongside furlough.
Good news for self-employed people who weren’t eligible before – if you filed your tax returns by 12pm on 2nd March 2021, you will be eligible to claim under the scheme.
The Government is trying a more targeted approach with new grants. It’s acknowledged that certain sectors have been impacted more than others by the pandemic. So, it has announced a new “Restart” grant. Non-essential retail businesses can get a grant of up to £6,000. Hospitality and leisure (including gyms) can get a grant of up to £18,000.
Like other grant schemes that have been in place, these will be managed by your local council. Although the scheme announced is for business in England, the Chancellor did confirm that the devolved nations will receive equivalent funding, which would indicate that we should see similar schemes across the whole of the UK.
The incentive payment for taking on new apprentices is increasing to £3,000 (from £1,500). This will cover apprentices of any age.
When the Bounce Back Loans (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS) come to an end, the “Recovery Loan Scheme” will start. These are Government backed loans of between £25,000 and £10 million. The Chancellor confirmed a number of banks that are participating in this; namely Lloyds, HSBC, and Natwest, with more to follow.
VAT will remain at 5% until September 2021. It will then increase to 12.5% for a period of 6 months and return to the standard rate in April 2022.
For hospitality and leisure, there will be an extension to the stop on business rates for the next 3 months. After this point, they will receive a discounted rate (2/3rds discount) for the remaining 9 months of the year.
Corporation tax will NOT increase at the moment. However, in April 2023 this will change. For any businesses who have a profit of £50,000 or less, corporation tax will remain at 19%. Businesses whose profits are more than this will be expected to pay a higher percentage of corporation tax, with the maximum payment being 25% of the Company’s profits. The Chancellor stated that the 25% cap will only apply to around 10% of businesses in the UK.
If you’d like to read more about the Budget, just click here https://www.gov.uk/government/news/budget-2021-what-you-need-to-know
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