Wednesday’s budget was arguably one of the most important and anticipated announcements in recent years. The Chancellor made it clear that this budget plan is to ‘protect the jobs and livelihoods of the British people through the remaining phase of this crisis’ and to support the UK’s long term economic recovery, announcing several tax changes, including corporation tax, to come in to effect later in this parliament.
We have reviewed the major key take outs from Rishi Sunak’s address that will shape the finances of people throughout the UK, as we come out of a very difficult year.
- As previously speculated, an extension of the Coronavirus Job Support Scheme (Furlough) was announced until September 2021, in a bid to protect people from redundancy. The government will continue to pay employees 80% of their wage, for hours they cannot work due to the pandemic. From July, employers will be expected to pay 10% towards the 80%, and 20% for August and September.
- An extension has also been given to the UK wide Self Employment Income Support Scheme. From next month a fourth grant, worth 80% of three months trading profits up to £7,500, will be available. This will be followed by a fifth covering May – September 2021, which will be open to claims from late July. The amount that can be claimed for the fifth grant will be determined by the amount of turnover that has been lost. As well as the above grants, an additional 600,000 people who filed a tax return for 2019-2020 will now be able to claim.
- Originally due to end on the 31st March, the current Stamp Duty holiday raised the starting threshold from £125,000 to £500,000. Due to the number of transactions, in a bid to support property purchases that may not have been completed before the end of March, an extension was granted to the temporary cut in Stamp Duty for England and Northern Ireland until 30th June 2021. To smooth the transition back to normal, the nil rate band will then become £250,000 until the end of September 2021.
- The rate of Corporation Tax is due to increase to 25% from April 2023. Businesses with profits greater than £250,000 will be taxed the full 25%, with businesses of profits £50,000 or less, will continue to be taxed at 19%, although the rate will be tapered up as they get closer to the £250,000 level.
- As a mitigation against the corporation tax increase to 25%, the Chancellor announced a “super deduction” for businesses when they invest in qualifying plant and machinery, which will increase the amount they can offset against their tax bill by 130% of the cost.
- In terms of income tax, the tax free personal allowance will increase to £12,570 in April, with the higher rate tax threshold increasing to £50,270. These amounts will then be frozen until April 2026.
- A new Recovery Loan scheme was announced in order to support access to finances for businesses, as they attempt to recover from the effects of the pandemic. The scheme ensures that any sized business can continue to access financial support up to the value of £10 million, once the existing Covid-19 based schemes close. Further details about the scheme should be available in the next few weeks.
- Other points from the Budget included the £20 per week uplift in Universal Credit being extended until September, and the freezing of inheritance tax, pensions life time allowance and annual capital gains tax exemptions. Duties on fuel, tobacco and alcohol were also frozen.
If you would like more information on any of the points mentioned above, contact a member of Team SAS who will happily guide you through the best options for your business.
*All information provided accurate as of March 2021
