So today (3rd March 2021) the Chancellor has released his 2021 budget.
Here are the details as announced so far with more to come over the next few days.
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The Furlough Scheme
He has announced that the Job Retention Scheme, otherwise known as the furlough scheme, will not now end in April but will be extended until the end of September.
The scheme will continue to pay up to 80% of the unworked hours of staff with employers continuing to pay National Insurance and workplace pension contributions. On top of this from July employers will contribute 10% of the unworked hours and for August and September 20%.
The Self Employed
The Chancellor has announced that a fourth grant, covering the three-month period from the start of February until the end of April.
As with all the previous grants, it will be worth 80% of three months’ average trading profits, up to £7,500 in total and claims will be able to be made from next month.
As before the scheme will be open those of you who are self-employed or in partnership, who have a trading profit of less than £50,000 on average and where your self-employed income represents at least the same amount as any non-trading income such as a pension.
HMRC will announce details of the exact criteria shortly but it is likely to follow the last grant where you had to specifically declare that you had reasonable belief that you would suffer a significant reduction to your trading profit.
This fourth grant will be followed by a fifth. This grant will be available from late July and will enable those who’s turnover has reduced by more than 30% to claim the usual 80% of average profits, capped at £7,500 and if your turnover has reduced by less than 30% you will be able to claim a grant of 30% of average profits, capped at £2,850.
What is different this time around is that if you were newly self-employed and only completed your first tax return for the 2019-20 tax year, ie the last one you will now qualify where you previously didn’t.
I will let you know more about this as the information is released.
The current £20 per week uplift in the Universal Credit has been extended by six months and this will help many families who have been badly impacted by the Covid.
Business Re-Start Grants
The chancellor also unveiled details of a £5bn grant scheme to help High Street shops and hospitality firms in England reopen after lockdown.
Non-essential retail businesses will receive grants of up to £6,000 per premises and hospitality and leisure businesses who are required to re-open later will get grants of up to £18,000.
These grants will be distributed directly to those business that qualify by local authorities from April and this scheme will replace the current monthly grant system.
There is also a further discretionary fund that local authorities will have available to assist those businesses that are re-starting but don’t have premises or have premises that do not have a rateable value, for instance shared offices.
Business rates holiday extended to June
Rishi Sunak has confirmed that 100% business rates holiday will be extended through to the end of June.
Then the rates will be discounted for the remaining nine months of the year by two-thirds.
Bounce Back and Coronavirus Business Interruption Loans
Both of these will end shortly and will be replaced by a new Recover Loan Scheme available to any business with loans from £25,000 to £10m supported by an 80% government backed guarantee.
Bringing back 95% mortgages
The Budget also included details of a mortgage guarantee scheme to help people with small deposits get on the property ladder.
The government will offer incentives to lenders to bring back 95% mortgages.
What is interesting about this scheme is that it is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit.
It is going to be based on the Help to Buy mortgage guarantee scheme, which closed to new loans at the end of 2016.
The current stamp duty freeze that was due to end at the end March has also been extended for a further three months so that any deals on the brink of completion do not collapse and after that the nil rate band will start at £250,000 for a further 3 months, returning to normal from 1st October.
Cash for cricket and football
Mr Sunak also announced a £300m recovery package for sport, another sector battered by social distancing restrictions.
Among the sports to benefit will be football, cricket, tennis and horse racing.
He has also promised £25m of new funding to support grassroots football – enough to build around 700 new pitches across the UK, as well as cash to kick-start a 2030 UK and Ireland World Cup bid.
Cash for the arts
The arts sector has struggled since last March, as gig venues, museums and cinemas have been forced to close and it is true to say that many who work in the sector are freelancers who have fallen through the cracks of support for the self-employed.
The Chancellor has announced an extra £300m into the Culture Recovery Fund, with England’s museums and cultural bodies also receiving £90m to keep going until they can open their doors in May.
Money to help locals buy the local pub
With pubs and other hospitality venues battered by the pandemic, the chancellor has promised a £150m pot to help communities take over local pubs at threat of closure.
Under the fund, which will open in the summer, community groups will be able to bid for up to £250,000 of matched-funding to help them to buy local pubs to run as community-owned businesses.
As we come out of the pandemic the Chancellor needs to look where he can start to recover some of the money spent and it looks like one of the first places is amongst Companies.
If you are a Company, from April 2023 the Chancellor has announced his intention to increase the rate from the current level of 19% to 25% but only for those with profits over £250,000.
If your profits are between £50,000 and £250,000 you will pay between 19% and 25% and for those with profits below £50,000 the rate will stay at 19%.
Taken into context, the UK Corporation tax rate is presently one of the lowest and even at 25% it would still be the lowest of the G7 nations.
As far as income tax is concerned, he has frozen the personal tax allowance at £12,570 for next year, 2021-22.
This is the threshold, above which we all start paying income tax, and the £50,000 threshold for the 40% tax rate band has also stayed the same. Both have been frozen until April 2026.
The threshold at which you have to register will remain at £85,000 until 2024 and the current 5% reduced rate of VAT for hospitality will be extended for six months to 30 September followed by interim rate of 12.5% for another six months.
Fuel and Alcohol duty
Both fuel and alcohol duty have been maintained at existing levels so the planned increase of 5p per litre on fuel will not now be taking place.
The chancellor announced a new national infrastructure bank will open in Leeds and that green projects will be supported through a green recovery bond.
Contactless Card Limit
The treasury have also announce today that the limit on a single payment using contactless card technology will rise to £100 later this year.
Combatting COVID-19 fraud
The government will invest over £100 million in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud within COVID-19 support packages, including the CJRS and SEISS, representing one of the largest responses to a fraud risk by HMRC.
In addition, the government will raise awareness of enforcement action in order to deter fraud, and will significantly strengthen law enforcement for Bounce Back Loans.
I hope this has been useful and you can find out more at my website now and over the next few days as the details are released by the government and HMRC.