The government is updating their guidance following the Chancellor’s Budget announcement this afternoon, and here they are in manageable chunks!
The Chancellor Rishi Sunak has this afternoon announced the Budget in the House of Commons. Please find below the key points of the budget (I have made these notes as he spoke so apologies if there are any errors).
The Chancellor introduced the budget by saying that the Office for Budget Responsibility (OBR) expects the economy to return to its pre-pandemic level by the middle of next year, but the economy will be 3% smaller in five years than it would have been due to the damage done by the pandemic.
The Chancellor said the basis of today’s Budget is a 3 part plan:Continue doing ‘whatever it takes’ to protect jobs and livelihoods
- Fix the public finances
- Build our future economy
Protect jobs and livelihoods
The furlough (Coronavirus Job Retention) scheme will be extended to the end of September. For employees – they will receive 80% of their wages for hours not worked during this time. As Businesses start to reopen they will be asked to contribute to the cost of furlough. July contribution will be 10%, rising to 20% in August and September.
Support for the self-employed will continue until September, with a fourth grant covering Feb to April – 3 months of support at 80% of average trading profits, and a fifth grant from May onwards. The amount of the fifth grant will depend on the impact on a business’ turnover. People whose turnover has fallen by 30% or more will receive the 80% grant, people whose turnover has fallen by less than 30% will receive a 30% grant. Provided a tax return has been filed by last night (2019/20), meaning people are now registered as self-employed, an extra 600,000 people will be eligible for the fourth and fifth grants.https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension
Universal Credit uplift of £20 a week will continue for a further 6 months. Working tax credit payments with equivalent support will be provided for the next 6 months administered via a one-off payment of £500.
Extension of the apprenticeship hiring incentive in England to September 2021 and a doubling the incentive payment to employers offering apprenticeships to people of any age to £3000.
£7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
New Restart Grants from April to help businesses reopen and recover. Non-essential retail premises will receive grants of up to £6000 per premises. Hospitality and leisure businesses are opening later and will be eligible for grants of up to £18,000.
New recovery loan schemelaunched – available to any size business – loans from £25k up to £10m with a government guarantee of 80%, can be applied for from now until the end of the year https://www.gov.uk/guidance/recovery-loan-scheme
100% business rate holiday will continue for 3 months until the end of June for businesses in the retail, leisure and hospitality sectors. For the remaining 9 months, business rates will be discounted by 2/3rds, up to a value of £2m for closed businesses
5% reduced rate of VAT for hospitality, accommodation and attractions will be extended to 30 September, then won’t go back to 20%, there will be an interim rate of 12.5% for 6 months, not returning to the standard rate until April next year.
The £500,000 nil rate band for stamp duty will be extended to 30th June, then the nil rate will be £250,000 until the end of September. Only returning to usual level (£125,000) from October 1st.
New policy – government mortgage guarantee for homebuyers who can only afford a 5% deposit, supported by some of the largest lenders.
An additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
More than doubling the legal limit for single contactless payments, from £45 to £100
Fix the public finances
Not going to raise the rate of income tax, NI or VAT. Instead will freeze personal tax thresholds. This will increase again next year to £12,570 but then stay at this level until April 2026. The higher rate tax threshold will similarly be increased next year to £50,270and will remain at this level for the same period. “No-one’s take home pay wil be less than it is now as a result of this policy.”
Also keep at the same current level the Inheritance tax thresholds, pensions lifetime allowance, the annual exempt amount in capital gains tax and for 2 years the VAT reg threshold at £85,000.
£100m for a HMRC tax force to clamp down on tax avoidance and evasion.
In April 2023 the rate of Corporation tax paid on company profits, will increase to 25%. Small profits rate for small businesses with a profit of £50,000 or less – wil have the same current rate of 19% There will be a tapering rate so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate (applicable to 10% of companies).
Tax treatment of losses extended– businesses will be able to carry back losses of up to £2m for 3 years, so businesses can claim additional tax refunds.
Build our future economy
- New Super Deduction for investment – for the next 2 years when businesses invest they can reduce their tax bill by 130% of the cost (investment-led recovery). Currently it is equivalent to the cost of their investment.
- Planned increases in duties for alcohol will be cancelled – alcohol duties frozen.
- Fuel duty will also not be increased.
- UK Infrastructure Bank – based in Leeds, investing in public and private projects, to finance a green and industrial revolution. Capitalisation of £12bn, At least £40bn total investment in infrastructure.
- Two Help to Grow Schemes: Help to Grow Management – management training, mentoring and peer learning for small businesses. Help to Grow Digital– helping small businesses to develop digital skills, providing free training and help to invest in software. Register interest in www.gov.uk/helptogrow
- £1.6bn to continue vaccine rollout
- 2 consultations launched today: R&D tax reliefs; Enterprise Investment Incentives
- Visa reforms aimed at attracting highly skilled migrants
- More flexibility to pensions industry in their investments.
- New ‘economic campus’ in Darlington.
- Over £1bn in 45 New Towns Deals
- First round of Levelling Up fundannounced today. (Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22.)
- New Freeports policy – areas of economic development – 8 areas announced around the country (nearest is Liverpool City Region).
Furlough (Coronavirus Job Retention Scheme)
- For periods ending on or before 30 April 2021 , you can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have made employees redundant, or they stopped working for you on or after 23 September 2020 and you have subsequently re-employed them. You do not need to have previously claimed for an employee before the 30 October 2020 to claim.
- For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods starting on or after 1 May 2021.
- For periods ending on or before 30 June 2021 you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. From 1 July 2021, the level of grant will be reduced each month and you will be asked to contribute towards the cost of your furloughed employees’ wages. You do not need to have previously claimed for an employee before the 30 October 2020 to claim.
- From 1st July the employer contribution wages for hours not worked will be 10% up to £312.50, and for August and September will be 20% up to £625.
- You can no longer submit claims for claim periods ending on or before 31 October 2020. Claims for furlough days in February 2021 must be made by 15 March 2021.
- Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
- Employers will need to pay for employer National Insurance contributions and pension costs.
- Steps to take before calculating your claim: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme
- Calculate how much you can claim: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme
- Summary of Changes: https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme
Extension of lower rate VAT for hospitality, holiday accommodation and attractions
- As announced today, the government will be legislating to:
- extend the temporary reduced rate of VAT of 5% until 30 September 2021
- prepare for a new rate of 12.5% from 1 October 2021 to 31 March 2022
- The supplies to which the temporary reduced rates will apply remain the same.
We’ve included links to updated guidance as it’s been issued this afternoon and the full budget announcements can be found here: https://www.gov.uk/government/news/budget-2021-what-you-need-to-know
Ask The Experts: Live Q&A
Don’t forget we have the next ‘Ask the Experts: Online Q&A’ tomorrow (Thursday 4 March) morning, 10am to 12pm at https://www.blackburnbid.co.uk/coronavirus-qa/ where you can ask questions about how the budget will impact you and your business, as well as anything else you are concerned or unsure about at this time.