2021 Budget Update
Yesterday, Wednesday 3rd March, the Chancellor outlined his 2021 budget. Below are the key points with links to further information where applicable. As and when more information becomes available we will share that with you.
- Coronavirus Job Retention Scheme (CJRS) extension - The CJRS will be extended across the UK for five months until 30 September 2021. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.
- UK Self-Employment Income Support Scheme (SEISS) fourth and fifth grants confirmed
SEISS fourth grant – the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. 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 tax return to be eligible for the fourth grant.
SEISS fifth grant – there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.
- Restart Grants - The government will provide ‘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. The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated.
- VAT reduction for the UK’s tourism and hospitality sector - The temporary reduced rate of 5% VAT for goods and services supplied by the UK tourism and hospitality sector will be extended until 30 September 2021. A 12.5% rate will apply for the subsequent six months until 31 March 2022.
- Business rates relief - Eligible retail, hospitality and leisure properties in England will receive 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.
- New Recovery Loan Scheme - From 6 April 2021 a new Recovery Loan Scheme has been announced to enable businesses of any size to access loans and other kinds of finance up to £10 million per business once the existing COVID-19 loan schemes close.
- Statutory Sick Pay (SSP) Rebate Scheme - Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. This scheme is a temporary COVID-19 measure intended to support employers while levels of sickness absence are high.
- VAT Deferral New Payment Scheme - Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
- Extended loss carry back for businesses - To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.
- Increase in corporation tax - The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.
- Other measures include:
- £300 million to extend the Culture Recovery Fund.
- £90 million for continued support for government-sponsored National Museums and cultural bodies in England.
- Duty rates on beer, cider, wine and spirits will be frozen for another year.
- Employers in England who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
- Employers in England who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire. This is in addition to the existing £1,000 payment the government provides.
- A new Help to Grow training scheme over three years for SMEs on digital skills and management skills.
- Zoo Animals Fund extended for a further three months until 30 June 2021.
- £18.8 million to transform local cultural projects in Hartlepool, Carlisle, Wakefield and Yeovil.
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