Budget 2021: Everything Businesses Need to Know

The Chancellor announced the much-awaited Budget 2021 today. Here are all the essential business facts you need to know:

Tax changes

Mr Sunak revealed numerous future tax changes that will impact both businesses and individuals. Some of the news might be welcome, while the rest of it won’t be.

Corporate Tax will remain at 19 per cent as of 2023 for businesses with profits below £50,000. But companies whose profits are over £250,000 will have their Corporate Tax hiked to 25 per cent. Businesses falling between £50,000 and £250,000 will pay corporate taxes on a tapering scale.

This tax rate is still the lowest in the G7.

No changes to VAT, National Insurance or Income Tax were announced, despite expectations to the contrary. These will all remain at current levels for now.

The income tax personal allowance will, however, be frozen until 2026 and not change with inflation.

In 2020, Mr Sunak announced a Stamp Duty Holiday in order to try and boost purchases of new homes. Any home valued up to £500,000 would not be subject to Stamp Duty fees until 21 March 2021.

This Stamp Duty Holiday has been extended until the end of June 2021. From the end of June until September 2021, the holiday will then still be in force for homes costing up to £250,000. After September, the threshold will go back down to its usual £125,000.

Planned duties for alcohol and fuel were scrapped, and the current duties were frozen for another year.

Coronavirus support announcements

The Coronavirus Job Retention Scheme (CJRS), commonly referred to as the “furlough scheme”, has been extended until September 2021.

The scheme, as originally detailed in March 2020, pays up to 80 per cent of employees’ wages for the time that they are furloughed.

As of July 2021, however, employers will need to contribute 10 per cent towards the hours that staff do not work and 20 per cent in August and September.

The Self-Employment Income Support Scheme (SEISS) will likewise continue. A fourth grant has been announced, running from February to April 2021. The SEISS will cover up to 80 per cent of a self-employed person’s trading profits for three months, to a maximum of £7,500.

The Self-Employment Income Support Scheme (SEISS) will likewise continue. A fourth grant has been announced, running from February to April 2021. The SEISS will cover up to 80 per cent of a self-employed person’s trading profits for three months, to a maximum of £7,500.

A fifth grant will be available from May through September. But to be eligible for the full 80 per cent of the fifth grant, a self-employed person’s income must have fallen by 30 per cent or more. Otherwise, they will only receive 30 per cent of their trading profits through the scheme.

The grant is now also available to more people than before. Anyone who filed a tax return for 2019-20 by midnight on Tuesday, 2 March 2020 is now eligible.

The Chancellor extended the Business Rates Holiday until the end of June. After that, a discounted rate will follow for nine months.

A new “Recovery Loan Scheme” was announced. This scheme will replace the Bounce Back Loan scheme as well as the Coronavirus Business Interruption Loan Scheme (CBILS). The Recovery Loan Scheme offers loans of between £25,000 and £10 million. Eighty per cent of the loan is guaranteed by the government.

A Restart Grants Scheme of £5 billion was announced. Firms affected by COVID can access up to £18,000 through this scheme. This is aimed at retail, hospitality, accommodation, leisure and personal care firms. Non-essential retailers can receive up to £6,000.

The hospitality sector will continue to benefit from the 5 per cent VAT rate until September. After that, the rate will go up to 12.5 per cent.

Extra funding will also be given for apprenticeships. Companies will be offered a cash incentive to take on apprentices — between £1,000 and £3,000 per hire.

If you need any specific assistance regarding any of the points mentioned in The Chancellor’s Budget 2021 speech and how they affect your business, please do not hesitate to contact us.