Today the Chancellor has provided the budget for 2021 and beyond, updating the country on new measures required to combat the effects of the COVID-19 pandemic and future changes to tax to pay for them.
Below we have summarised the key headlines, and as further detail emerges we will keep you informed.
Coronavirus Job Retention Scheme
The scheme has now been extended until the end of September 2021.
Employees will see no change.
Employers will contribute from July 2021 onwards.
Self Employed Income Support
4th and 5th Stage grants will be made available.
This will be scaled based on the drop in turnover seen with the amount received reduced.
Self-employed with over a 30% reduction in turnover will receive an 80% under the terms of the previous grant scheme.
Self employed with less than a 30% reduction will receive 30%.
Those who submitted a tax return for 19/20 can now claim the 4th and 5th stage grants.
Reduced VAT of 5% for hospitality and leisure is to be held for further 6 months with an interim VAT rate of 12.5% to be introduced in April next year.
The £500,000 nil rate band has been extended to 30th June 2021.
New grants will be available to applicable businesses:
Non-Essential retail businesses can claim up to £6,000.
Hospitality and Leisure businesses can claim up to £18,000.
100% business rate holiday to continue until the end of June 2021.
For the remaining nine months of the year, business rates will be discounted by two thirds, up to a value of £2million for closed businesses.
VAT for Hospitality and Leisure
The 5% reduced VAT rate for hospitality and leisure has been extended by 6 months.
A 12.5% interim rate will then be introduced for a further 6 months with the 20% standard rate reintroduced in April next year.
No raise of income tax or national insurance rates however, personal tax thresholds will be frozen until April 2026, effective from next year.
The following are also all to be frozen:
Inheritance Tax nil rate bands
Pension allowance bands
Annual Exempt Amount for capital gains tax.
VAT rate and registration threshold to remain frozen until April 2026.
From April 2023 Corporation Tax will be increased to 25%.
Businesses with £50,000 or less profit will remain at a rate of 19%.
There will be a taper in place for businesses with profit above £50,000, going up to £250,000 of profit.
Profits above £250,000 will be taxed at 25%.
Tax treatment of losses
Businesses to now be able to carry back tax losses of up to £2million for 3 years.
Business Investment “Super Deduction”
When companies invest in capital equipment, they will be able to reduce their tax bill by 130% of the cost.
Should you have any questions or require advice on any of the above please do get in touch.
This material is published for the information of clients. It provides an overview and no action should be taken without consulting detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.