Need-to-knows from Spring Budget 2021

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Breaking down Spring Budget 2021 for businesses

When I watched last month’s Spring Budget 2021, I didn’t quite know what to expect. Would the Chancellor raise taxes now to start chipping away at the colossal COVID-19 debt or would he kick the can down the road?

The answer was a bit of both, really.

There were no changes to the tax rates involving income tax, national insurance or VAT – the Treasury’s three biggest revenue streams by a long way. That also repeated a Tory manifesto pledge from 2019.

That still left the door open for Rishi Sunak to tinker with some of the lower profile taxes involving capital gains or inheritance, but all we got were frozen allowances and thresholds.

Instead, the Chancellor focused on providing more support to businesses and individuals to recover from the pandemic. If you own a business, here’s what you need to know.

Extension for flagship support schemes

Employers will be glad to know the furlough scheme will remain in place until 30 September 2021.

Workers can be placed on furlough between now and 30 June 2021 and receive the existing 80% Government contribution for the unworked hours, up to £2,500 a month. National insurance and workplace pension contributions will still need to be paid in full.

In July 2021, employers will need to pick up 10% of a furloughed worker’s wages and the Government’s contribution falls to 70%. For August and September 2021, employers need to cover 20%, the Government will pay 60%. The furlough scheme is set to end on 30 September 2021.

Self-employed income support

If you’re a sole trader or in a business partnership, the odds are you’ve claimed a grant or three over the last year through the self-employed income support scheme (SEISS).

Like two of the previous grants, the fourth grant covers 80% of three months’ average trading profits up to £7,500 in total. Crucially, if you filed a 2019/20 tax return by midnight on 2 March 2021, you are eligible to claim from mid-April 2021.

The fifth grant will work slightly differently. While it covers May to September 2021, only people whose turnover fell by more than 30% will receive the 80% grant. A 30% grant is available to those whose turnover fell by less than 30%.

Recovery loans

Businesses that have taken out either of the business interruption loans or the bounce-back loans can apply for loans and other finance options through the recovery loan scheme.

It kicks in on 6 April 2021 and offers term loans, overdrafts, invoice and asset finance of up to £10m to be repaid in up to six years.

If your business claimed a coronavirus-related loan before 31 March 2021, it will be able to qualify for loans and other finance options through the recovery loan scheme.

If you want to know more about any of these options or another measure from Spring Budget 2021 that I didn’t touch on, call me on 07803 782100 or email me on jon@red76tax.com