The 2021 budget delivered a number of new grants, extensions to most of the existing schemes and the promise of tax rises in the future.
Before getting into the new announcements, I would like to remind you of some changes made already this year:
- any self-assessment tax that was due by January 2021 can be delayed but must be paid by 1 April 2021 to avoid a 5% penalty;
- you can apply to HMRC for VAT deferred from Spring 2020 to be spread over 2021;
- bounce back loan repayments can now be spread over 10 years instead of 5;
- the National Living Wage will increase to £8.91 from April.
Extensions of existing schemes
There will be two more rounds of grant for the self-employed, covering up to September. The amount to be received will depend on how the nation gets on with the easing of lockdown restrictions.
The Coronavirus Job Retention Scheme has also been extended. The scheme will remain in place until September, paying 80% of wages until June, 70% in July and then 60% in August and September.
There was no mention of the Return to Work grant, which was due to be paid out this Spring. This was due to pay £1,000 per furloughed employee if their employer keeps them on. The Chancellor has previously eluded to the grant returning, but we will have to wait and see.
New grants have been announced for management training and for digital tools to help businesses grow. We are waiting for more information about how these two Help to Grow schemes will work.
Employers who take on new apprentices will see the grant they receive double, to £3,000.
A further grant was announced for specific businesses who were forced to close due to lockdown restrictions. This Restart Grant will pay retail, hospitality and leisure businesses a grant at the point that they re-open. Depending on the size of the business and the sector, this could be as much as £18,000.
The temporary 5% rate on certain hospitality sales will remain in place until September 2021. It will then increase to 12.5% for six months, before returning to 20% in April 2022.
The exemption from Making Tax Digital for businesses whose turnover is below the threshold will be withdrawn, meaning that they need to submit their tax returns in a digitally compliant way.
The penalty scheme for late submission and payment of VAT and self-assessment taxes is due to change from March 2022, bringing the charges in-line for these two taxes.
The personal allowance, basic and higher rate bands, are not changing. There was no word on whether payments on account will be deferred from 31 July 2022, so we recommend that clients expect to have to pay this tax when it normally falls due.
A new 25% rate of Corporation Tax has been announced, but this will not come in to effect until 2023. We will cover this in more detail closer to the time.
A ‘super-deduction’ will be available for businesses who invest in new equipment over the two years from April 2021. The initial government announcement could be misread as if you would receive 130% back, sadly this is not the case. This scheme will give you 25% tax relief rather than the usual 19%.
The temporary cut in Stamp Duty Land Tax will now stay until September.
A new guarantee scheme will be brought in to support homebuyers in securing a mortgage with 5% deposit. This will be for mortgages up to £600,000.
This is a summary of the most significant changes. For further detail on these and yesterday’s other announcements, please download our 2021 Budget Report.
If you have any questions about how this will impact you and your business, please get in touch.