Important information for those affected by Covid-19

We've read the HM Treasury Budget 2021 document which you can find here and put down some of the key points, overall there is not a lot of change for the average business. We're really disappointed that Directors have still be left out of any direct support due to Covid-19 business interruption but at least some new help for those newly self-employed how missed out on previous support. 

Supporting People

CJRS Scheme

This scheme provides 80% of the usual pay to an employee who has been furloughed where qualifying conditions are met. This scheme will now continue until September 2021 with employers contributing to wages from July onwards, it should be noted that the usual pay is a calculation in the pay periods of tax years 2019/20 not the gross value in their pay today. 

There is no additional support for Directors or Office Holders who traditionally have received funds through PAYE and Dividends. 

Self-Employment Income Support Scheme

The forth grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 - this can be claimed from late April 2021.

The fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.

Welfare

Income tax exemptions for COVID-19 tests and home office expenses

The government will extend the income tax exemption and NICs disregard for COVID-19 antigen tests provided by, or reimbursed by, employers and for employer reimbursed expenses covering the cost of home office equipment, to the 2021-22 tax year.

Universal Credit 

The government is extending the temporary £20 per week increase to the Universal Credit standard allowance for a further six months.

Suspension of the Minimum Income Floor for self-employed Universal Credit claimants will continue until the end of July 2021.

Relaxation in Working Tax Credit hours requirement

The government will continue to treat Working Tax Credit claimants across the UK who have been furloughed, or experienced a temporary reduction in their working hours as a result of COVID-19, as working their normal hours for the duration of the CJRS. It is important that employer's record & submit RTI & CJRS claims with the correct hours, including flexible furlough hours.



Supporting jobs

Apprenticeships 

Schemes for high quality traineeships for young people will continue to attract funding of £1000 per trainee and payments of up to £3000 will be paid to employers who hire new apprentices.

We've previously noted that this funding will only be made through apprentices registered with recognised training establishments rather than an employer arranging training themselves. Unfortunately we have yet to see a successful placement with an client due to these requirements.

Business Loans & Grants

Recovery Loan Scheme

This will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses, we note that this scheme appears similar to the previous CBILS lending scheme.

Restart Grants

Up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses. 

Business Tax

Corporation tax

The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate. In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK.

Company vehicles

From 6 April 2021, fuel benefit charges and the van benefit charge will increase in line with CPI.

VAT threshold

The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022.

Interest harmonisation and reform of penalties for late submission and late payment of tax

The government will reform the penalty regime for VAT and Income Tax Self Assessment (ITSA) to make it fairer and more consistent. The new late submission regime will be points-based, and a financial penalty will only be issued when the relevant threshold is reached. The new late payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is. The government will introduce a new approach to interest charges and repayment interest to align VAT with other tax regimes. These reforms will come into effect:for VAT taxpayers, from periods starting on or after 1 April 2022; for taxpayers in ITSA with business or property income over £10,000 per year, from accounting periods beginning on or after 6 April 2023; and for all other taxpayers in ITSA, from accounting periods beginning on or after 6 April 2024.

Personal Tax

Tax under PAYE

There will be no change in the tax rates paid under Income Tax or NIC in the coming year, although no further rises in the personal allowances will be made after April 2021.

Inheritance Tax

Until April 2026 the nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million.

Capital Gains Tax Annual Exempt Amount

The value of gains that a taxpayer can realise before paying Capital Gains Tax, the AEA, will be maintained at the present level until April 2026. It will remain at £12,300 for individuals, personal representatives and some types of trusts and £6,150 for most trusts.

Fuel Duty

No rise in duty rates for Petrol or Diesel road fuel, existing changes for Red Diesel (non-road fuel) will continue as planned however exemptions for certain uses have been clarified.

Vehicle Excise Duty

This will rise in line with the RPI for cars, vans & motorcycles but has been frozen for HGV's

ISA

ISA investment limits remain unchanged.

All the other bits that didn't get said

Statutory Sick Pay (SSP) Rebate Scheme

This scheme will continue until further notice, however steps for closure will be set out in due course.

VAT Deferral New Payment Scheme

Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments interest free from March 2021.

VAT reduction for tourism and hospitality sector

The temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. A 12.5% rate will apply for the subsequent six months until 31 March 2022. A gross price reduction is not necessary for supply to end consumers.

Business rates relief

Eligible retail,hospitality and leisure properties in England will get 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties.

Some businesses will continue to qualify for additional rate relief as in previous years, your local authority will have more details on this.

Extended loss carry back for businesses

The trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses and legislation confirmed the rules and limits will be issued in due course.