Today (March 3rd), Chancellor Rishi Sunak set out the true impact the last 12 months have had on the UK’s economy – and outlined plans for what we hope to be a stronger financial future as we emerge from another lockdown.

 

Addressing Parliament for the 2021 Budget, the Chancellor told the Commons of his three-prong approach: “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances. And third, in today’s Budget we begin the work of building our future economy.”

 

So, what were the main points from the Budget, and how will they affect your business?

 

Furlough extended

After weeks of speculation, the Chancellor has confirmed that the Coronavirus Job Retention Scheme – furlough – will be extended until the end of September. Under the scheme, which was originally introduced during the first lockdown, the Government will continue to pay 80 per cent of furloughed employees’ salaries, with employers asked to contribute 10 per cent from July and 20 per cent from August.

 

More support for self-employed

Of all the support schemes implemented by the Government, none has been more widely debated – or criticised – than the Self-Employed Income Support Scheme (SEISS). In today’s announcement, however, the Chancellor announced that the scheme would be extended until the end of September 2021 – with those who missed out on previous grants covered under the latest update.

 

As the deadline for tax returns has now passed, over 600,000 more newly self-employed workers can now claim the fourth and fifth grants, providing they filed their first tax return.

 

Support for hospitality, leisure and retail businesses

With businesses in the hospitality, leisure and retail sectors to remain closed until April 12th at the earliest, a new package of support has been announced to help them get back on their feet. The £5 billion Restart Grant, which begins in April, will help non-essential shops, pubs, clubs, hotels, restaurants, gyms, salons and any other small businesses through to June 21st – the date earmarked for freedom in the Prime Minister’s roadmap out of lockdown.

 

Under these measures, non-essential retail businesses will get up to £6,000 per premises to help them reopen on April 12th. Those due to open later in the year can receive up to £18,000 depending on their rateable value.

 

In a further show of support for the struggling sector, the VAT rate for hospitality firms will be maintained at a reduced 5 per cent rate until September, while the business rates holiday for firms in England will continue until June, with a 75 per cent discount in place after that.

 

Planned increases in duties for spirits, wine, cider and beer will also be cancelled, with all alcohol duties frozen for the second year in a row.

 

Personal tax thresholds frozen

In a bid to follow a fair approach for fixing the public finances, it was announced that the Government would be “asking more of those people and businesses who can afford to pay and protecting those who cannot” – therefore, not raising the rates of income tax, national insurance, or VAT.

 

While the income tax threshold will increase to £12,570 next year, it will be kept at this level until 2026. The higher rate threshold will also rise in 2022, to £50,270, but will then also stay there until 2026.

 

Corporation Tax rises

Corporation Tax is set to increase to 25 per cent in 2023 – well after the point when the OBR expect the economy to have recovered. The Chancellor was keen to reinforce that, as Corporation Tax is only charged on profits, any struggling businesses will be unaffected by the rise.

 

Furthering the support for small businesses, a Small Profits Rate for those with profits of £50,000 or les will be maintained at the current rate of 19 per cent.

 

Super deductions for innovative businesses

For the next two years, companies that invest can reduce their tax bill by 130 per cent in a newly announced ‘super deduction’ – a move which the Chancellor described as “the biggest business tax cut in modern British history”.

 

The measures mean that, for example, a construction firm buying £10m of new equipment could reduce its taxable income in the year it invests by £13m, rather than the £2.6m offered under previous rules.

 

In addition to the above measures, the Chancellor also announced the following steps:

  • Teesport has been awarded Freeport status
  • Darlington has been confirmed as the new location for the Government’s Treasury North
  • Incentive payments for hiring new apprentices will be doubled to £3,000
  • Stamp duty holiday on properties worth up to £500,000 will be extended until the end of June
  • Government will guarantee 95 per cent mortgages to help those who can only afford a 5 per cent deposit get on the property ladder
  • There will be no changes to inheritance tax, lifetime pension allowance or capital gains tax allowances
  • The £20-a-week Universal Credit uplift will continue for another six months
  • A £300m support package for professional sport, and an additional £25m for grassroots football
  • The contactless payment limit is to increase to £100