Smarter Spring Budget – 03/03/2021

The Chancellor has just delivered his budget speech to the Houses of Parliament. As predicted in previous blogs, a lot of what was said has been leaked / announced over the last few days, but he did provide more details. However, there will be a lot more information to come when detailed papers are released. Today we bring you the headline news. Over the coming weeks, we will update on the finer points as they are released. Onto the headlines:

• Pandemic Support – The Chancellor has recognised that the impact of the pandemic will continue for some time and has therefore extended a number of schemes
  • Furlough – will continue at 80% to the end of September. Employers will be asked to contribute 10% of the cost in July and 20% in August and September
  • Self-Employment Income Support Grant
    • Scheme now extended to the end of September
    • Fourth Grant (February to April) will still be at 80%. A 2019/20 tax return must have been filed. Other criteria due to remain the same as the third grant. Claims to open from late April.
    • Fifth Grant (May to September) there is a little confusion as he suggested 3 months, but in our book that is 5 months. For those who have seen their turnover reduce by more than 30% they will receive the full 80% grant. If turnover has reduced by less than 30% then a reduced 30% grant will be payable. Claims to open from late July.
    • Newly self employed from 2019/20 year will be included now for the fourth and fifth grant, as long as the 2019/20 Tax Return was submitted by end of 2/3/2021
    • Will need to see detailed conditions before we can give advice on eligibility
  • Universal Credit – Extra £20 per week will continue for 6 months until the end of September
  • Business Support Grants
    • Current grant schemes come to an end at the end of March
    • From April the Government will bring in Restart Grants, again handled through Local Authorities. Business sectors are limited
      • Non-essential retail – grants of up to £6,000
      • Hospitality, leisure & personal care – grants of up to £18,000
    • Will need to wait for the detail until we can see how much grant each business will qualify for, but we suspect it will be based on rateable value
  • Loan Schemes
    • CBIL and Bounce Back Schemes were mentioned, but without dates. We assume this means that there is no extension on these schemes and the end of March deadline still stands
    • The Chancellor announced a new loan scheme called the Recovery Loan Scheme. Loans of £25,000 to £10m are available with Government guarantee of 80%
  • Business Rates Holiday
    • 100% will be retained for 3 months till the end of June
    • For the rest of the year, till end of March 2022, rates will be reduced by two thirds
  • Hospitality & Leisure VAT Rates
    • The 5% rate will be extended to the end of September
    • October 2021 to March 2022 will carry a 12.5% rate
    • April 2022 will return to 20%
  • Stamp Duty
    • Nil rate band will be retained at £500,000 to end of June
    • £250,000 July to September
    • Back to £125,000 from October
  • Other Measures
    • Living Wage – Will rise to £8.91 from April. We are unsure if furlough sums will be adjusted for this increase (furlough figures are currently based upon 2019/20 earnings)
    • Apprenticeships – The Government Grant for apprentices will double to £3,000 for apprentices of any age
    • 95% Mortgages – Government have announced a scheme where those with only a 5% deposit can secure a 95% mortgage, with the Government guaranteeing the mortgage. Major lenders have already signed up
  • Tax Rates and Allowances – This budget was about recovery and relatively little was mentioned about how the budget deficit would be clawed back. There were several announcements of interest:
    • The Government will stick to its election pledge and not increase Income Tax, National Insurance or VAT
    • Personal Tax allowances will rise in April (small rises), but will then be frozen until 2026, along with:
      • Inheritance Tax Allowance
      • Capital Gains Tax Allowance
      • Pensions Lifetime Allowance
    • VAT threshold of £85,000 will be frozen for another 2 years from April 2022
    • Corporation Tax
      • From April 2023 the Corporation Tax rate will increase to 25% (from current 19%)
      • Those companies with a taxable profit of under £50,000 will be protected and still only pay 19%
      • Those companies with taxable profits from £50,000 to £250,000 there will be some form of taper relief i.e. only those companies with a taxable profit of over £250,000 will pay the full 25% rate
      • Tax losses will now be able to be carried back over 3 years. More details needed before we can provide guidance. This will be available for the 2020/21 and 2021/22 tax years
    • Business Investment – From 1 April 2021, for 2 years, companies (it looks as if this is for Limited companies only) investing in qualifying new plant and machinery assets will get a 130% first-year capital allowance. On the face of it this looks like a valuable additional relief, but we would like to see the finer detail first before advising on it
    • Alcohol and fuel duties frozen again
    • Help to grow scheme – Chancellor announced a scheme for IT training and software implementation with grants available of up to £5,000. We await with interest details of this scheme

These are the headlines that we heard and wanted to get these out to you. Rest assured we will be looking at the detail and will report further. Often there are things buried in the written budget report, which we will analyse over the coming days.

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