Today, Chancellor of the Exchequer Rishi Sunak, set out his 2021 budget for the UK.
He begins by addressing that the pandemic has “fundamentally altered” people’s lives. He adds that more than 700,000 people have lost their jobs and our economy shrank by almost 10% last year whilst borrowing is increasing.
Here’s an overview of announcements made by the Chancellor today that affect UK businesses. To view the full details of the 2021 Budget, visit Gov.co.uk.
The furlough scheme
The Chancellor announced today that the furlough scheme will be extended until the end of September 2021. Employees will continue to have 80% of their salary for hours not worked paid by the furlough scheme. In July, the Government will ask businesses to contribute 10% towards salaries and 20% in August and September. Topping up wages to 100%.
Support for the self employed and businesses
Support for the self employed will continue until September. The Self Employment Income Support (SEISS) scheme grants will be extended until September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim. The fourth grant will cover the period between February and April and the fifth grant will cover May onwards. For those whose turnover has fallen more than 30%, they will continue to receive the 80% grant. For those whose turnover has fallen less than 30% will now receive a 30% grant.
A new Restart Grant to begin in April to help businesses get going again. Businesses can access a one-off cash grant of up to £18,000 for businesses in the hospitality, accommodation, leisure, personal care and gym business sectors in England.
The Chancellor also announced the introduction of a new Recovery Loan scheme. Loan amounts will be available between £25,001 and £10 million and assets and invoice finance between £1,000 and £10 million to help businesses of all sizes.
Small to medium sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee.
An extension to the Apprenticeship Hiring Incentive in England to September 2021 and an increase of payment to £3000. As well as an additional £126 million for 40,000 more traineeships in England, funding high quality work placements for 16-24 year olds in 2021/22.
Business rates relief
The Chancellor also announced today that the business rates relief will be extended until the end of June. The rest of the year the business rates relief will be discounted by two thirds, up to a value of £2m for closed businesses.
VAT & Corporation tax
The 5% rate of VAT will also be extended until the 30th of September for the hospitality, accommodation and attractions across the UK. Followed by an interim rate of 12.5% for an additional 6 months returning to the standard rate of 20% next April. A £5bn cut in VAT. The VAT registration threshold will remain unchanged at £85,000 until 2024.
Corporation tax will be increased to 25% from April 2023. Businesses with profits of less than £50,000 will still pay 19%. The Chancellor also announced a new Small Profits Rate to ensure only businesses with profits over £250,000 will be taxed the 25% rate.