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  • John Massey

UK Budget 2021 at a glance


Chancellor's budget delivered 3 March 2021


Brief summary of announcements affecting small businesses and their owners:




Furlough scheme extended until Sep 2021


The value of an employees salary covered by the furlough grant remains at 80% until June 2021, falling to 70% for July and 60% for August - September 2021.


Personal tax rates and allowances


Rates of tax have remained unchanged at 20% for Basic Rate Taxpayers and 40% Higher Rate.


The tax free Personal Allowance increases to £12,570 from 6 April 2021 and will remain at that level until 2025/26.


National Minimum Wage


Hourly rate increases to £8.91 for those aged over 23 years old (previously 25 y.o.)

More detail here.


Self employed (sole-traders / partnerships)


SEISS grant 4 has been confirmed at 80% of average 3 months profits (capped at £2,500 per month). Eligible traders will be invited to apply from late April until 31 May 2021.


SEISS grant 5 will be available from late July 2021 with more conditions:

  • If your turnover has fallen by > 30% then you'll qualify for grant 5 at 80%

  • If your turnover has fallen by < 30% then you'll qualify for grant 5 at 30%

Both grants 4 and 5 will be available to newer traders that started self-employment since 6 April 2019 and have already submitted their 2019/20 Tax Return by midnight 2 March 2021.


Business loans


From April 2021 the Recovery Loan Scheme will replace the Bounce Back Loan Scheme. Loans between £25k - £10m will be available to most businesses that have been affected by the pandemic and can continue to be viable post-pandemic. The government is backing 80% of the loan.


VAT


The temporary 5% VAT rate for the Hospitality industry is extended until September 2021after which it will increase to 12.5% until March 2022.


VAT registration threshold frozen at £85,000 until at least 2024 (de-registration threshold at £83,000).


Corporation tax


From April 2023 the main rate of Corporation Tax increases to 25%, however this only affects company's with profits exceeding £250,000. Profits under £50,000 will continue to be taxed at 19% with a tapered increase from 20-25% for companies with profits between £50-250k.


Super deduction of 130% for capital expenditure by a company from 1 April 2021. Planning tip - Machinery, vans and computer equipment purchases should now be deferred until after 1 April 2021.




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