As the busiest tax year I can remember came to an end last month, 2021/22 got under way and it’s picked up where it left off – both for small businesses and myself.

Fortunately, given the latest Spring Budget was only less than five weeks before the start of the new tax year on 6 April 2021, there were no major tax changes for me to get my head around at short notice.

However, plenty of pre-announced tax changes have kicked in, while extensions and replacements to existing COVID-19 support schemes have been announced.

In this short blog, I round-up several of what I consider to be the most relevant tax changes to potentially affect small businesses in 2021/22.

COVID-19 support

The recovery loan scheme is now open for business, offering businesses the chance to apply for term loans, overdrafts, invoice or asset finance of between £25,000 and £10 million.

Much like the previous business interruption loans and the bounce-back loans, your business needs to show it has been adversely affected by the pandemic. There’s a lenders’ list on the British Business Bank website.

Don’t forget as well that applications for grants available through round four of the self-employed income support scheme opened in late April and you have until 1 June 2021 to make your claim.

Need-to-knows for employers

If you employ low-paid workers within your business, not only did the hourly national living wage rates rise last month but the age at which they’re entitled to the maximum hourly rate fell from 25 to 23.

From 1 April 2021, the hourly minimum rate  for over-23s is £8.91, for 21 to 22-year-olds it’s £8.36, 18 to 20-year-olds are entitled to £6.56, under-18s get at least £4.62 and apprentices receive £4.30.

Eligible employers can continue to use the furlough scheme until 30 September 2021. You only need to foot the furloughed worker’s bill for National Insurance and workplace pension contributions until 30 June.

Should COVID-19 continue to recede over the summer as more people get vaccinated, employer contributions will gradually increase from 1 July 2021 until the scheme winds down in the autumn.

Business rates

If you run a business in the hospitality or leisure sectors in England and benefit from small business rates relief, you don’t have to worry about business rates until 1 July 2021.

From this point, you will have to pay a third of your bill. The amount of relief available is capped at £2m if your business had to close on 5 January 2021, or £105,000 for all other eligible businesses in England.

Most eligible businesses in England, and there are around 750,000 of them, will receive 75% relief from their business rates bills until 31 March 2021. A welcome boost as the economy reopens.

VAT deferral scheme

Businesses that deferred paying their VAT bills for quarters falling between 20 March and 30 June 2020 can spread the repayments over several months in 2021/22.

These smaller monthly payments are interest-free until 31 March 2022, although you must join the VAT deferral payment scheme by 21 June 2021. If you join the scheme in June, you can spread the instalments over eight months until your VAT liability is fully settled.

Capital allowance ‘super-deduction’

The new super-deduction opened on 1 April 2021, enabling limited companies to benefit from a 130% first-year capital allowance if they invest in qualifying plant and machinery.

This allows companies to potentially cut their corporation tax bill by up to 25p for every £1 they invest in qualifying business assets. They will also benefit from a 50% first-year allowance for qualifying special-rate (including long-life) assets.

If you want to know more about any of these changes, call me on 07803 782100 or email me on jon@red76tax.com