Legal News | 5.03.21
Legal Update: Wansbroughs Business Budget Summary
On Wednesday 3 March 2021 Chancellor of the Exchequer Rishi Sunak set out the government’s tax and spending plans for 2021 in his Budget.
The key measures announced affecting businesses are:
1. Coronavirus Job Retention Scheme (CJRS): Extension to September 2021
The CJRS will continue until September 2021 with employees receiving 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions and pensions required in April, May and June. From July, the government will introduce an employer contribution towards the cost of the unworked hours of 10% in July, 20% in August and September.
2. National Living Wage Increase
From 1 April 2021, the National Living Wage will increase from £8.72 for those 25 years and over to £8.91 for those aged 23 and over.
3. Incentive Payments for Hiring New Apprentices
Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with the £1,500 per new apprentice hire under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16-18 year old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.
4. Help to Grow Scheme: Management and Digital
Under the Help to Grow Management Scheme, the government will offer a new management programme to upskill 30,000 SMEs over three years. The programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. It is a 12 week programme with the cost subsidised by 90%.
Under the Help to Grow Digital Scheme, the government will help 100,000 SMEs adopt productivity-enhancing software in autumn 2021. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.
5. Business Rates Relief
The 100% business rates relief will continue for eligible retail, hospitality and leisure properties from 1 April 2021 to 30 June 2021. A 66% business rates relief will follow this for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to close on 5 January 2021, or £105,000 per business for other eligible properties.
6. Stamp Duty Measures Extended
The government is extending the temporary increase in the residential SDLT Nil Rate Band of £500,000 until 30 June 2021. From 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.
7. Capital Allowances: 130% Super Deduction for Main Rate Assets and 50% First Year Allowance for Special Rate Assets for Two Years
Companies who invest in plant and machinery on or after 1 April 2021 will be able to claim a super deduction providing allowances of 130% on most new plant and machinery investments that would ordinarily qualify for 18% main rate writing down allowances. Additionally businesses can claim a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances. The measure will have effect in relation to qualifying expenditure from 1 April 2021 and will exclude expenditures incurred on contracts entered into prior to Budget day on 3 March 2021.
8. Restart Grants
The government is providing ‘Restart Grants’ in England of 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.
9. Recovery Loan Scheme
From 6 April 2021, the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to encourage banks to continue to provide finance to businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
10. Corporation Tax Rise in 2023
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 will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK.
11. The UK Infrastructure Bank
The new UK Infrastructure Bank will provide financing support to private sector and local authority infrastructure projects across the UK, to help meet government objectives on climate change and regional economic growth. The Bank will be headquartered in Leeds and will start operating in an interim form later in the spring.
12. Extended Loss Carry Back for Business
To help otherwise viable UK businesses, which have been pushed into a loss-making position, 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.
If you would like more specific advice on how these changes could affect your business please get in touch with your usual contact or email: firstname.lastname@example.org.