Here is a quick summary of the main measures announced in the Budget.

Very few tax rises have been introduced, and the main emphasis has been on keeping allowances and tax rates the same for 4 years – hence collecting tax via a method called fiscal drag – assuming the economy is going to grow, but not letting allowances follow suite.

Coronavirus Extensions

Furlough now extended,

• full 80% for employees, to September 2021;
• available from May 2021 to new employees on the payroll by 2nd March 2021;
• employers grant is to be reduced by 10% for July, and 20% for August and September.

SEISS (Self-employed Coronavirus Income Support Scheme) – Grants 4 and 5

• new criteria to include income reported on 2020 personal tax returns.
• Grant 4 will be 80% of 3 months average profits up to £7,500
• Grant 5 will be 80% or 30% depending on whether turnover has dropped byore or less than 30%.

Every grant has different qualification criteria so keeping a diary of how your business has been affected, to show it et those criteria and a review before submission of returns is recommended.

Business rates for retail, hospitality & leisure.

• 100% relief is extended to June 2021,
• reduced to 66% until March 2022

New Recovery Loan Scheme.

• available from 6^th April to 31^st December 2021
• 80% guaranteed by the Government.
• 3–6-year term
• available in addition to existing Covid loans

Reduced stamp duty land tax rates are extended to June 2021

Bicycles provided by employers before 21^st December 2020, will be exempt from requirement to be used mainly for business in order to be tax free, for tax years ended 5^th April 2021 and 5^th April 2022

Use of home allowances for home working employees, extended to April 2022

 

 

Enhanced Fraud detection

A lot of money is being put into fraud detection regarding Coronavirus Grants and loans. They will principally be checking that eligibility criteria have been met; so, evidence needs to be kept for the 6-year enquiry window.

HMRC have thousands of notifications to the fraud reporting hot-line to chase up!

Corporation Tax

New tax rates from 1^st April 2023

Tax rate will depend on your profits – 19% if under £50,000, with sliding scale up to 25% by £250,000 i.e 26.5% marginal rate in the band between

However:-

• If you have two companies then the bands are shared out 50% to each company, if you have 3 then 1/3 each and so on. There are special associated company rules which define what counts as having two companies e.g. If you have a company & your wife has a company, then it counts that each of you has 2 companies for these purposes, so each can only earn £25,000 before starting to move up the sliding scale.
• Dividend income, although not subject to corporation tax, will count as income when assessing bands and hence tax rate on taxable business profits.
• Investment companies will always pay the higher 25% rate

Other changes

• 130% supper deduction for new plant contracted after 3^rd March 2021 until the new rates come in on 1^st April 2023
• 50% first year allowance for new integral features and long life assets.
• Annual Investment Allowance temporary increase to £1m extended to 31^st December 2021
• Carry Back Loss relief for periods after April 2020, against 3 prior years profits.
• Refundable tax credit for Research and Development is to be capped at 3 x PAYE bill plus £20,000, with some exemptions.

Personal Taxes

Sole traders have been given similar temporary loss carry back, to get relief against 3 prior years profits,

Sole traders can also benefit from the new capital allowance changes but NOT the super deduction.

2021 changes to tax bands, previously announced, will still come into force but no other changes for four years

Miscellaneous

VAT

Reduced 5% VAT rate for Hospitality is extended to 30^th September 2021, when it will increase to 12.5%, not reverting back to 20% until 1^st April 2022

New Penalty regime

The tax penalty regime is being revised to be points based, like driving offences, for all taxes as they become digital,  with more offences and bigger penalties for regular offenders.

Apprenticeship Schemes

The current apprenticeship scheme is extended to September 2021

A new flexi-apprentice scheme is to be introduced in January 2022, whereby apprentices can work via an agency for multiple employers

Freeports

Eight freeports have been announced.  Within these areas there will be a beneficial tax regime

• 100% business rates relief
• 100% stamp duty relief
• 100% capital allowances for Plant
• 10% buildings allowances
• Employers National Insurance Relief TBC