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.
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.
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).
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.