Budget 2021: What you need to know

On Wednesday 3rd March, Chancellor Rishi Sunak set out his plan to kickstart the economy in the 2021 Budget. 

Over the last 18 months government spending & borrowing has hit an all time high as the Treasury has been called upon to support millions of people during the coronavirus pandemic, and the measures set by the chancellor show the beginnings of a pathway to getting back to a pre COVID world.

The APARI team have reviewed the Budget with our users in mind. We’ve picked out some key areas for our APARI Community, as well as a few honourable mentions. 

Furlough

The furlough scheme has been further extended until the end of September. Employees will receive 80% of their wages throughout this period. Employers - who are already required to pay the Employer’s National Insurance & Pension contributions - will need to make further contributions towards the cost of furlough, with a 10% contribution during July, and 20% in both August and September. 

Self Employed Income Support Scheme

Many self employed business owners will be able to claim the Self Employed Income Support Grant. The 4th instalment of the grant will once again be up to 80% of 3 months average trading profits - you must have traded in both 19/20 and 20/21 to intend to continue to trade. 

There will also be a 5th grant covering May to September 2021, however the amount you can claim will be based on how much your trade was affected by the pandemic - the fifth grant criteria is;

• 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more

• 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%

To be eligible, you must have submitted your 19/20 Self Assessment Tax Return by 2nd March 2021.

NB - the Self Employment Support Scheme grants are taxable in the year in which they are received.  The APARI Covid Calculator  will help you to estimate your taxable amount.

Restart Grant

From April 2021, non essential retail business could apply for a “Restart Grant” of up to £6,000 per premises, and hospitality business’ up to £18,000 to help them with reopening when lock down is lifted. The closing date for accessing this grant was 30th June 2021.

Stamp Duty Holiday

The current stamp duty holiday is to be extended to 30th June, meaning Landlords looking to add additional properties to their portfolio, or even buy their first buy-to-let property will be charged just 3% SDLT for properties up to £500,000. From the 1st July - 30th September 2021 this bracket will decrease to £250,000.

Other small business help:

• Claim 50% of the cost of new software (up to £5,000) that helps your company become more productive.

• Business rate exemption for a further 3 months for companies that operate within the retail, hospitality and leisure sectors (followed by a 66% reduction for a further 9 months) 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.

• The 5% VAT for the hospitality industry will continue until September 2021, when it will rise to 12.5% (until April 2022); and

• £3,000 incentive to take on new apprentices.

New penalties for filing your taxes late

HMRC have also announced that late filing penalties for MTD will run on a points based system. We will cover this in more detail in future articles. For the latest on MTD, check out our pillar page.

Honourable mentions 

- Personal Allowance Threshold risen to £12,570 for 21/22 but will remain frozen until 2026

- Higher Rate Tax Threshold risen to £50,270 for 21/22 but will remain frozen until 2026

-Corporation Tax rates for 23/24 will increase to 25% if profits are over £250,000. Profits below £50,000 will be taxed at the current 19% but taper up to 25% as their get closer to the £250,00 limit. Losses of up to £2million can be carried back for 3 years. 

- a Super Deduction of 130% for investments over the next 2 years - APARI are awaiting further clarification from the government on how this will be implemented. 

- Universal Credit uplift of £20 will continue until October 2021- Working Tax Credits uplift will be a £500 one off payment.

- National Minimum Wage will increase to £8.91 from April 

-Inheritance Tax threshold, pensions lifetime allowance, Capital Gains Tax threshold & VAT registration threshold are all frozen at the current rates. 

- Beer, Cider, Spirits, Wine and Fuel duty planned increase has been cancelled