Many measures have been introduced, extended, updated. Below is a summary of the most relevant areas affecting small business.
Impact of Covid in 3
• Over 700,000 jobs lost since March 2020
• Economy shrunk by @10%
• Borrowing higher than outside of wartime
“OBR is Forecasting a swifter and more sustained recovery to…pre Covid level by 6 months earlier than anticipated”. Rishi Sunak
Furlough Scheme
• Scheme extended to end of September 2021 with employee payment remaining at 80% throughout
• Employers to contribute 10% for July 2021
• Employers to contribute 20% for August and September 2021
SEISS Scheme [self-employed income support]
• Self-Employment Income Support scheme extended to September 2021
• SEISS scheme [4] covers February to April 2021, workers who meet the criteria can claim 80 per cent of average monthly profits capped at £2,500
• SEISS scheme [5] will be the final grant applying from May onwards. People will continue to receive grants worth three months’ of average profits with the system open for claims from late July.
• SEISS scheme [5] People whose turnover has fallen by 30 percent or more will continue to receive full 80 percent grant
• SEISS scheme [5] People whose turnover has fallen by less than 30 percent will get a 30 percent grant
Income Tax Rates & Allowances: From 6 April 2021
• No changes to income tax rates or to the basic personal allowance for 2021/22
• Personal allowance will rise to £12,750 from 6 April 2022 and will remain until 2026
• The higher-rate threshold will increase to £50,270 from 6 April 2022 and will also remain at that level
National Insurance Contributions (NICs): No changes
Pensions: The Lifetime Allowance will be maintained at its current level of £1,073,100 until April 2026
ISA: The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000
Making Tax Digital for Income Tax: No further announcement made
Capital Gains Tax Rates & Allowances
CGT thresholds will be maintained at their current levels until April 2026
Inheritance Tax Rates & Allowances
Inheritance tax thresholds will be maintained at their current levels until April 2026
Employers: Statutory Sick Pay (SSP) and the Covid-19 virus
• SSP may be paid from day one of the employee’s absence from work
• For a business with less than 250 employees, the cost of statutory sick pay for up to 14 days will continue to be refunded by the government in full
Companies: Tax rates
• Corporation Tax main rate will increase to 25% from April 2023
• Businesses with profits of £50,000 or less, @70% of trading companies, will continue be taxed at 19%
• A new taper for profits above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate
• New 130% super-deduction available from beginning April 2021
• The new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
Research & Development
• Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability)
• A review of Research & Development tax reliefs launched to make sure the UK remains a competitive location for cutting-edge research.
Preventing abuse of the Covid Government support schemes
£100 million for a new Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes
Company Trading Losses
To further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company
Contactless payments
More than doubling the legal limit for single contactless payments, from £45 to £100
Extension of the apprenticeship hiring incentive
Scheme open until September 2021 and the incentive payment increased £3,000.
Business Rate Relief
750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from the 100% business rates relief until the end of June. They will then continue to be discounted by two thirds.
VAT
• Extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September
• Followed by a 12.5% rate for a further six months until 31 March 2022
• VAT returns to 20% from 1st April 2022
Business Recovery Loan Scheme
• Applications for CBILS and Bounce Back loans will close on 31.03.2021
• New UK-wide Recovery Loan Scheme created to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of business recovery
• The scheme launches on 6 April and is open until 31 December, subject to review
• Loans will be available through a network of accredited lenders, whose names will be made public in due course
Restart grants
One off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England
Stamp Duty Land Tax [SDLT]
Extension to the temporary cut in Stamp Duty Land Tax of £500,000 nil rate band extended to 30th June 2021
The Mortgage Guarantee scheme
A new mortgage guarantee scheme will enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit. This will increase the availability of 95% Loan-to-value mortgage products, enabling more households to access mortgages without the need for prohibitively large deposits. Click here for more information on the scheme.
These are the key highlights based on the issues and opportunities facing our clients. I will continue to update this via our blog as more information on the new schemes become available.
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