Budget Update – 3rd March 2021

Today was the long awaited Spring Budget, and to be fair after the leaks there wasn’t much left to announce!

It was full of extra measures for support during the pandemic giving comfort to many business owners, along with expected tax rises – although thankfully not just yet for the rises.

Further Pandemic Support

  • Furlough (CJRS) extended until end of September – 80% due to employees for the hours they’ve not worked, with businesses contributing 10% in July, and 20% in August and September
  • Restart Grants from April to help businesses re-open – up to £6000 for non essential retail and up to £18000 for hospitality and leisure businesses (via your local councils as before)
  • Recovery Loan Scheme – businesses of any size can get loans from £25k to £10m through to the end of this year with a Government Guarantee of 80% (more details to come!)
  • Business Rates holiday extended til June 2021, with a discount for the remainder of the year
  • VAT Reduction for Hospitality and Tourism – 5% to be extended to 30th September, then interim rate of 12.5% for 6 months, back to standard 20% April 2022

Personal Tax

  • Increase of the Personal Allowance from £12,500 to £12,570 from April 2021, frozen until 2026
  • Increase of the Higher Rate Threshold from £50,000 to £50,270 from April 2021, frozen until 2026
  • The National Living Wage will rise to £8.91 from April 2021
  • Freeze on tax rates

Corporation Tax

  • Rate of Corporation Tax to increase from 19% in April 2023 as follows:
    • Profits up to £50,000 = 19%
    • £50,001 to £250,000 = tapered rate between 19-25%
    • Profits over £250,001 = 25%
  • Tax treatment of losses – businesses can carry back losses of up to £2m for up to 3 years
  • Super deduction – businesses can offset 130% of costs of investments from taxable profits for the next 2 years

Other Taxes/Duties

  • Freeze on alcohol duty
  • Freeze on fuel duty
  • Freeze on VAT threshold (£85k)
  • Freeze on Inheritance Tax, Pensions and annual Capital Gains Tax exempt amount

Housing Market

  • Stamp Duty Holiday extended:
    • nil rate up to £500,000 til end of June 2021
    • nil rate up to £250,000 1st July 2021 – 30th September 2021
    • nil rate up to £125,000 will return from 1st October 2021
  • Mortgage guarantee for 95% loan to value mortgages

Overall, the budget was not as bad as I was expecting.  Compared to previously planned Corporation Tax rates the smallest of companies will be better off, and the bigger companies hit hardest.  And some hope for businesses to get through the remainder of the pandemic, and be able to thrive when able to open again.  I’m sure the Autumn Budget will bring more tax rises, when the full cost of the pandemic is known, but for now let’s celebrate the small wins available to us!

More details from the BBC