On 3rd March 2021, Chancellor Rishi Sunak delivered the 2021 Budget which unveiled a range of new measures to set out a path to recovery as the country emerges from the pandemic.
Since the first national lockdown in March 2020, the Government has spent billions to protect jobs and livelihoods, with total claims through the Coronavirus Job Retention Scheme (CJRS) alone totalling £53.8 billion as of February 2021.
Whilst the Budget predominately focussed on new support measures and the extension of existing support schemes for businesses, the Chancellor also announced new tax-raising measures to start balancing the books and measures to aid recovery post-pandemic.
Find out more about the key points announced in the 2021 budget and how they affect you in our latest blog post.
Extension of the CJRS
Perhaps the most highly anticipated announcement within the budget was the extension of the CJRS, otherwise known as the furlough scheme.
As part of the Budget, it was confirmed that the scheme, which covers up to 80% of furloughed worker’s pay would be kept in place until September 2021.
However, employers would be asked to start contributing to the cost of furloughing their employees. From July, employers would need to contribute 10% and in August and September, the contribution would be 20%.
Extension of the SEISS
Another welcome announcement was the extension of the Self Employment Support scheme (SEISS).
It was confirmed that along with the CJRS, the SEISS would also be extended to September 2021, with eligible individuals able to claim a fourth grant.
Additionally, people who filed a self-assessment tax return for the first time in 2019-2020 would also be able to claim for the first time; making an additional 600,000 people eligible for support.
A total of £5 billion has been allocated to provide restart grants to support businesses hit hardest by the Coronavirus restrictions.
Businesses in England operating in the hospitality, accommodation, leisure, personal care and gym industry will be eligible for a one-off cash grant of up to £18,000.
Recovery Loan Scheme
To help business across all sectors, a new UK-wide Recovery Loan Scheme will be available to offer loans between £25,001 – £10 million and invoice finance between £1,000 and £10 million to businesses of all sizes.
Film & TV Production Restart Scheme
To support businesses in the film and TV production industries that have been impacted significantly by restrictions on filming, the Film & Production Scheme which makes direct compensation available to producers that incur losses as a result of restrictions will be extended for 6 months until 31st December 2021.
Additionally, £300m will be made available through the Culture Recovery Fund to theatres, museums and other cultural organisations in England.
Extension of VAT Cut
The current VAT cut to 5% for hospitality, accommodation and attractions in the UK will stay in place until the end of September 2021.
From September, the rate will be increased to 12.5% for a further six months until March 2022 when it will return to the normal rate of 20%.
Business Rates Relief
In more support for the industries most impacted by restrictions, it was also announced that 750,000 businesses in England in the retail, hospitality and leisure sectors would benefit from business rates relief.
Statutory Sick Pay
To help businesses deal with the cost of having staff absent from work due to illness, it was confirmed that SMEs across the UK will continue to be able to reclaim up to 2 weeks of sick pay (SSP) from the Government.
In order to start to balance out some of the unprecedented costs of Coronavirus support measures, a number of tax changes were announced including:
- The current Personal Tax Allowance and higher rate threshold would be maintained from April 2022 until April 2026, a move which is expected to bring in 1.3 million new taxpayers.
- From 2023, the rate of corporation tax will increase to a maximum of 25% for businesses dependent on their profits.
- The Lifetime Allowance of £1,073,100 will be maintained until April 2026.
- Inheritance tax thresholds will be maintained at their current levels until April 2026.
- The amount of SME repayable R&D tax credit a business can get per year will be capped at £20,000.
- £100 million will be set aside to help crack down on COVID fraudsters and reclaim money from those that have exploited support schemes.
Talk to the Experts
We hope your business is able to benefit from the changes announced in the 2021 Budget, a complete list of measures announced can be found on the GOV.UK website.
Throughout the coronavirus pandemic, we have been helping clients get the help they are eligible for; providing support for grant claims, furlough reclaims and SEISS claims.
If you are looking for an experienced accountant to support your business with accountancy or outsourced payroll services, get in touch with us today on 0117 379 0810 or fill out a contact form and we will get back to you.
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This post was written by Steph Roffey