Spring Budget 2021
Rishi Sunak has reiterated that he will continue to do “whatever it takes” to turn the UK’s economy around, following a 10% shrink – the largest fall in 300 years – in the wake of the Coronavirus pandemic.
With the highest level of borrowings since World War Two punitive tax increases would not have come as a surprise. However, dubbing this budget “bold but honest”, the Chancellor has attempted to balance continuing to support British businesses and society, whilst encouraging economic recovery and growth.
It is hoped that the announced measures should return the UK economy to pre-COVID levels by mid-2022.
We have pulled together the key points from the budget below.
- Tax-free Personal Allowance will increase to £12,570 from April 2021 and will be frozen until 2026
- Higher rate Income Tax threshold will be frozen at £50,270 from April 2021 to 2026
- National Insurance rates will also be frozen until 2026
- Capital Gains Tax Annual Exemptions, Inheritance Tax Nil Rate Bands, and the pension Lifetime Allowance will also remain frozen until 2026
- Universal credit uplift of £20 per month has been extended for a further 6 months until 30 September 2021, with a one-off payment of £500 being made available
- The National Living Wage will increase to £8.91 as expected on 1 April 2021.
Hospitality and Tourism
- The reduced 5% VAT rate will be extended to the end of September 2021
- An interim rate of 12.5% will be levied between October 2021and March 2022
- The normal rate of 20% will return in April 2022.
- To help those affected by the delays caused by a busy housing market, the new £500,000 nil rate band for Stamp Duty will not end on 31 March 2021 and will instead reduce to £250,000 on 1 July 2021
- The nil rate band will revert to the standard £125,000on 1 October 2021
- Top lenders will be offering a 95% mortgage for first time buyers with small deposits, guaranteed by the government from April.
- All businesses, whether they are incorporated or un-incorporated, will be able to carry losses back over 3 years, providing a helpful cash benefit to those businesses that have been struggling
- A new ‘Super Deduction’ will be introduced to encourage incorporated businesses to invest, with qualifying expenditure benefiting from a 130% first year Capital Allowance
- From April 2023 the Corporation Tax rate will rise from the current 19% to 25%. A small profits rate of 19% will continue for incorporated businesses with profits below £50,000, with the tax rate being tapered for profits between £50,000 and £250,000
- New consultations regarding R&D Tax Relief have been announced to ensure that the UK remains a competitive location for cutting edge research.
- Help to Grow: Digital, will help small and medium sized businesses to develop digital skills with free expert training and a 50% discount on new productivity enhancing software of up to £5,000
- Apprenticeship incentive payments will increase to £3,000 for any new hires, of any age from 3 March 2021.
- The furlough scheme has been extended to 30 September 2021 with workers continuing to receive 80% of their pay, capped at £2,500 per month. Employers will be asked for contributions of 10% from July and 20% in August and September towards the hours their staff do not work
- A fourth self-employment grant will be available from April, worth 80% of three months average trading profits, capped at £7,500. A fifth grant will be available from May onwards. The grant has been widened to include those who became self-employed in the 2019/20 tax year, providing they have submitted a tax return by 2 March 2021
- COVID Recovery Loans of between £25,000 and £15million will be available for eligible businesses, with the Government providing an 80% guarantee
- Business rates holiday will remain until 30 June, with a 75% discounted rate continuing for 9 months thereafter
- Restart Grants of up to £18,000 are to be made available for hospitality, accommodation, leisure, personal care, and gym businesses.
Please do not hesitate to contact us if you would like to explore how any of the announcements may impact you and your business.
Ellie Hammett ACCA
Ellie started with Evolution ABS in April 2010 and became a fully qualified as a Chartered Certified accountant in December 2015. Ellie manages a portfolio of agricultural clients and oversees the marketing committee.
Ellie grew up on her parents’ dairy farm in Dorset before her family moved to Devon in 1998. She now lives with her husband and little boy on the family beef, arable and sheep farm in East Devon.
In her spare time, Ellie enjoys helping out on the farm (although not so much the night-time lambing), spending time with her friends and the odd bit of retail therapy.
Since having her little boy, Ellie is in the office on Monday through to Thursday.