The Chancellor has delivered his Spring 2021 Budget which, in our opinion, for the majority of Hatherleigh’s clients, is good. Further support for businesses affected by Covid19 has been extended in the form of grants, loans, the furlough scheme, and self-employed income support. This was unexpected due to the roll out of the vaccine. The predicted loss or changes in capital gains and inheritance tax reliefs were not announced, much to our surprise.  

However, in a bid repay the government debt that has arisen from the Covid support, we witnessed announcements such as the frozen income tax thresholds and allowances, and corporation tax increases from 2023 (particularly for those with profits in excess of £250k). For those with profits of less than £50k, corporation tax will remain at 19%. To be fair, given the level of support the government has given to businesses and individuals, we consider frozen thresholds, and frozen income tax and NI percentages to be a positive outcome, compared to the predicted increases.

Key highlights are as follows:

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For Businesses and Employers

• Furlough Scheme Extension - the furlough scheme for employees has been extended until 30 September 2021, with furlough pay for employees remaining at the 80% / £2,500 cap pcm. However, from July 2021, the employer will have to contribute 10% towards the furlough, and 20% in August and September 2021. Employers NIC and employers’ pensions continue to remain a further cost to the employer.
• Corporation tax increases - corporation tax will increase to 25% in the financial year 2023/24 for companies earning profits in excess of £250k. For companies earning less than £50k profits, a new ‘small profits rate’ has been introduced, and those companies will continue to pay corporation tax at 19% from 2023/24 onwards. Companies with profits     between £50k and £250k will be subject to a tapered percentage. The 19% rate will continue for all companies for 2019/20, 2021/22 and 2022/23. Furthermore, if a company has made tax losses these can now be carried back 3 years (as opposed to the existing 12 months), although this is only applicable for the next two years.
• Self Employed Income Support Scheme - this has been extended for a fourth and fifth grant, and from the fourth grant onwards will include the newly self-employed (those who became self-employed in 2019/20). The fourth grant for the period February to April 2021 will be for 80% of average profits/ £7,500 cap. The fifth grant for the period May to July 2021 will be available, although the amount of the grant will be dependent on the reduction of your turnover. If more than 30% reduction, you will qualify for the 80%/£7,500 grant; if less than 30% reduction, you will receive a grant of 30% of average profits. Further eligibility may apply.

• Business rates relief - this has been extended for the retail and hospitality sector until 30 June 2021 providing business rate relief in full. From 1 July 2021, for the remaining nine months, business rates will be reduced by two thirds.

• Extra funding for apprenticeships - cash incentives to take on apprentices have been increased by £1,000 to £3,000 per hire.

• VAT reduction to 5% for the hospitality, accommodation and     attractions sectors will be extended until 30 September 2021. The rate     will then be 12.5% from 1 October 2021 to 31 March 2022.

• The announcement of a new “super deduction” - a tax relief to encourage business investment. From 1 April until 31 March 2023, businesses ploughing cash into 'qualifying' new plant and machinery will be able to claim the 'super deduction' on their tax bill. In short, this will enable companies to cut their tax bill by up to 25p for every £1 they invest.

• Businesses will be able access a new ‘Recovery loan scheme’ - this will replace the Bounce Back and Coronavirus Business Interruption Loan schemes. Loans between £25,000 and £10m will be available with an 80% government guarantee.

• Restart Grants scheme introduction - this will offer grants to non-essential retail businesses impacted by Covid19 up to £18,000. The cash injection will be aimed at retail, hospitality, accommodation, leisure and personal care firms. Non-essential retailers will be able to access £6,000 per business.

For Individuals

• £20 boost for weekly Universal Credit payments to be extended for  six months.
• Income tax thresholds to be frozen until April 2026, after next years planned increases. Inheritance tax thresholds and the pensions lifetime allowance will also be frozen for five years.

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Other

• Planned increases to alcohol duties and fuel duty have been cancelled.

• Introduction of a mortgage guarantee scheme to help individuals  get onto the housing ladder with small deposits. Under the scheme, the Government will offer lenders a guarantee, incentivising them to boost the number of riskier 95% mortgages.

• The stamp duty holiday has been extended until 30 June 2021 for properties under £500,000. The holiday for properties worth less than £250,000 will apply until 30 September 2021.

• The Bank of England will be given a new monetary policy remit with green goals to help tackle climate change.

• The new UK Infrastructure Bank will be based in Leeds. It will be given £12bn of capital and £10bn of government guarantees to help drive investment. Almost £400m will be invested alongside the private sector in high-growth start-ups.

• A new Treasury campus will be set up in Darlington in the north east of England.

• More than £1bn for new town redevelopment deals was announced.

• Eight new free ports will be set up at East Midlands airport, Liverpool, Felixstowe, Plymouth, Thames, Teesside, Humber and  Solent.

• The Treasury has set aside an extra £1.7bn to aid the vaccine rollout.

• The UK will launch a green savings bond aimed at retail investors to help raise money to drive the transition to net zero carbon emissions.

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