The Budget: How will the new announcements affect you?
The Chancellor, Rishi Sunak has announced his budget and a three part plan, aimed at protecting jobs and tackling the £2.1 trillion national debt brought about by government spending over the last year.
A swifter and more sustained recovery is expected, with a return to pre Covid levels by the middle of next year, with the OBR expecting the economy to grow by 4% in 2021.
In this article, we outline the Chancellor’s plans - key points are summarised below and we will have a video presentation and PDF document sent to you in the next 24 hours with a more detailed explanation of the announcements.
The Chancellor split his budget into three parts; supporting the economy, fixing public finances and building the future economy.
- Tax rates – the rate of corporation tax to increase to 25% in April 2023 for larger businesses. Small businesses will stay at 19%
- The furlough scheme is extended to September 2021 with employees continuing to receive 80% of their salary for hours not worked. No employer contributions beyond NICs and pensions for May and June. From July employers will be asked to contribute 10% and August to September 20%.
- A doubling of apprentice payments to £3,000 for all new hires of any age, with a new flexibility programme that will allow people to work for a number of different employers in the same sector.
- Restart grants to help business reopen – non essential retail will open first and will receive grants of up to £6,000. Personal care and gyms, hospitality and leisure businesses under more restrictions will be able to claim grants up to £18,000. There will also be further English local authority funding.
- New recovery loans scheme - businesses of any size will be able to apply for loans from £25,000 to £10m, the government will continue to provide lenders with an 80% guarantee.
- 100% business rates holiday to continue to the end of June for eligible businesses with up to 66% relief for the rest of the year
- Extension of the temporary reduced rate of VAT for hospitality and tourism businesses
- New super deduction incentive for business investment. The Chancellor says it will allow firms to reduce their tax bill by 130% of what they spend on investment.
- New help to grow scheme to help businesses with management and digital skills. Business schools will be able to offer MBA style training of 50 hours tuition, with businesses paying a maximum of £750 or 10% of the total cost. Small businesses will be eligible for free digital advice and a 50% contribution towards ‘productivity enhancing software.’
- Visa changes to fast track talent and encourage highly skilled workers to work in UK businesses. The UK’s Global Entrepreneur Programme will be expanded.
- The introduction of Free Ports - eight locations for free ports have been announced today. They are East Midlands airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent
- No income tax, National Insurance or VAT increases
- Personal tax allowance to be frozen until 2026 although the personal allowance will continue to go up to £12,570 as planned. It will then stay at that level until 2026
- The higher rate threshold will also go up to £50,270 but then will be frozen for the same period
- The rate of corporation tax to increase to 25% for larger businesses with a taper calculation
Self employed announcement
- SEISS extended to September 2021 with the 4th grant covering 80% of profits for February to April 2021 and the 5th will target support towards those most affected from July based on profits. If your profit has decreased by over 30% or more you will be entitled to the full grant, any decrease of less than 30% will result in a smaller grant
- £20 weekly increase in Universal Credit payments will be extended for six months. Working Tax Credit claimants will also get the boost but in the form of a £500 one-off payment.
Housing sector announcements
- Stamp duty cut extended by three months
- £500,000 nil rate band until 30 June
- £250 000 nil rate until end of September
- Usual rate of £125,000 from 1 October
- Government mortgage guarantee – the government will offer lenders a guarantee for borrowers needing 95% mortgages.
- Alcohol duty increases are cancelled
- Fuel duty increase cancelled
- Additional £19 million funding increase to domestic violence programmes
- A further £10 million funding for veterans’ mental health initiatives
- Extending funding for those affected by Thalidomide by £40 million and a lifetime commitment guaranteeing funding forever
- £300 million announcement to extend the Culture Recovery Fund
- Additional £2.4 billion in funding for devolved administration in Scotland, Wales & Northern Ireland.
- A new £150 million fund to help communities take ownership of pubs, theatres or sports club
Taxpayer protection taskforce
- A new £100 million team will be created to investigate and prosecute individuals and companies which have fraudulently claimed under government Covid schemes
We will have a video presentation and PDF download document sent to you in the next 24 hours with a more detailed explanation of the announcements. If you have any questions please get in touch with your Swindells partner who will be able to advise you further.
Selling Property: Capital Gains Tax & Private Residence Relief
When selling UK property, you will be liable to pay Capital Gains Tax (CGT) if you make a gain. Your gain is usually the difference between what you paid for your property and the amount you received when you sold it, though some additional costs may also be deductible.
Trading losses for sole traders & companies: Using them effectively
The economy has been hard hit by covid for over a year; with many businesses completely shut for much of 2020. Unincorporated businesses and companies may have even made a loss for the first time. Both can offset losses against profits – make sure that this is accounted for in the optimum way.
Tax relief for green businesses
Given the results of climate change, it makes sense to do all we can to reduce our emissions. Going green is also starting to make financial sense for businesses. There are several tax breaks available to companies that are looking to make offices more sustainable places to work.
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