Posted on March 5, 2021

Chancellor Rishi Sunak delivered a Budget that looks to help businesses and jobs through the pandemic, supporting the UK’s economic recovery and a series of tax raising plans to help rebalance the public finances.

The key announcements were as follows:-

• The Coronavirus Job Retention Scheme has been extended to 30 September 2021 with employers being asked to contribute 10% in July and 20% in August and September towards the cost of furloughed employees’ wages

• The corporation tax main rate will increase from 19% to 25% from 1 April 2023 for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief

• New first year capital allowances are introduced for 1 April 2021 to 31 March 2023 for qualifying new not “second hand” or “used” plant and machinery which allow a super deduction of 130%

• A fourth and fifth grant will be available under the self-employed income support scheme that covers February 2021 to September 2021

• From 6 April 2021 the Recovery Loan Scheme will be introduced that provides lenders with a guarantee of 80% on eligible loans between £25,000 to £10 million

• Personal allowance for income tax increases to £12,570 and the higher rate band increases to £50,270 for 2021/2022 but are then frozen for 5 years until 5 April 2026

• Restart grants will be provided 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

• 100% Business Rates Relief will continue for eligible retail, hospitality and leisure properties in England to 30 June 2021. The relief will reduce to 66% business rates relief for 1 July 2021 to 31 March 2022

• Temporary extension of the period businesses may carry back trading losses from 1 year to 3 years for company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020/21 and 2021/22 for unincorporated businesses

• The temporary reduced VAT rate of 5% for certain business sectors has been extended to 30 September 2021. A 12.5% rate will then apply for the subsequent six months to 31 March 2022

• Payments for employers who hire new apprentices will be increased from £1,500 to £3,000 for employers who hire an apprentice between 1 April 2021 and 30 September 2021 per new hire

• A new mortgage guarantee scheme will be introduced in April 2021 which provides a guarantee to lenders who offer mortgages to people with deposit of 5% on homes with a value up to £600,000

• Stamp duty nil rate band on residential properties in England up to £500,000 will continue to 30 June 2021 and will then taper to £250,000 to 30 September 2021 and then return to £125,000 from 1 October 2021

• A cap on the amount of R&D tax credit paid to loss making small or medium-sized enterprises will be introduced for accounting periods that commence on or after 1 April 2021

• The pensions lifetime allowance will be frozen at £1,073,100 for tax years 2021/22 to 2025/26

• The capital gains tax annual exemption of £12,300 and the inheritance tax nil rate band of £325,000 will be frozen until 5 April 2026

• Eight freeport locations have been confirmed which will have favourable tariffs and lower taxes

• From 6 April 2021, IR35 off-payroll rules will be extended to medium and large businesses in the private sector

• From April 2021, the National Living Wage will increase to £8.91 per hour

Download your full copy of the Garratts Budget Report 2021.

If you would like to discuss any of the issues raised by the Budget, please do contact us.

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