The Budget
and how it could affect you
After that many leaks…
...there weren’t too many surprises, when the Budget was released.
The Chancellor’s plans were a balance between continued support and a roadmap of how the government plan to kickstart the economic recovery and start to pay down the UK’s debt. The team here at Redstone have been reviewing what the Chancellor actually said in his delivery of the Budget and in reality, what that really meant. So here are our 10 take homes form this year's budget….#1 Updated Furlough scheme
The furlough scheme won’t change until the end of July, with the government still paying 80% of an employees wage for the hours they cannot work.
In July the government will be asking employers to contribute 10% and between August and September 20%. Great news for new starters, under this new scheme any employee who was added to the payroll by the 2nd of March will be eligible to claim under the scheme from the 1st May.
#2 Self-Employed Support
Over 600,000 new people can now benefit from the government’s support packages provided to the self-employed until the end of September, as long as they have completed their ‘19-‘20 tax return by midnight on the 2nd of March.
Two further SEISS grants will be available for self-employed people who continue to be affected by the pandemic.
However, for those who operate via their owner managed business who pay themselves a wage and dividends through their own company will still not be fully covered by the evolved scheme. If they operate through PAYE, they can still have SOME of their salary covered by the job retention scheme but this will exclude any dividends.#3 Lower VAT Rate for Hospitality firms
The hospitality sector will continue to pay the reduced 5% VAT rate until the end of September. Following this there will be an interim 12.5% until April 2022. After this it is anticipated to return to the standard rate.
#4 Business Rates Holiday
Retail and Hospitality firms will continue to receive Business Rate Holidays until the end of June. For the remaining 9 months of the financial year, their rates will be discounted by two thirds.
#5 £5b in restart grants for shops and businesses
From April, the ‘New Restart Grant’ will provide much-needed support to businesses that have had to close their doors due to the pandemic.
Grants are available for pubs, shops, hair salons, hotels and other non-essential businesses to support them through to the 21st June when everyone hopes all restrictions will be lifted.
#5 Continued...
Are you eligible for the Grant Restart Scheme? If you can answer yes to the following questions then you are: 1. Are you based in England? 2. Do you occupy the property on which you pay business rates? 3. Have you closed your doors due to the national lockdown from the 5th of January ‘21 onwards Or the 5th of November and 2nd of December and have not been able to present your normal in-person service from your premises? However, you cannot get funding if: • You’ve continued to operate during the lockdown period because you didn’t depend on providing direct in-person services from your premises (for example accountants) • You’ve chosen to close, but have not been required to close as part of national restrictions • Your business is in administration, insolvent or has been struck off the Companies House register • You have exceeded the permitted subsidy limit
#6 The NEW recovery loan scheme
This new scheme replaces the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme and will run until December 31, subject to review.
From the 6th of April, the NEW recovery loan scheme will be available to all UK businesses of any size. They can apply for a loan or overdraft between £25,000 and £10m until the end of 2021 along with asset and invoice finance between £1,000 and £10m. All will have a Government guarantee of 80%. The finance terms will be up to 6 years for term loans and asset finance. For overdrafts and invoice finance the terms will be up to three years. No personal guarantees will be taken on facilities up to £250,000. Like CBILS and the Bounce Back Loans, these will be available through a network of accredited lenders, whose names will be made public shortly. Details on how to apply will be revealed in the coming weeks.
#7 £700 million support package for art, culture and sporting institutions
An additional £408 million support package has been created for the culture sector in England to help museums, galleries, theatres and live music venues reopen their doors when the covid restrictions have been lifted.
A £300 million recovery package has been developed to back clubs and governing bodies across a wide range of sports in England including tennis, cricket and horse racing. An additional £25 million will be spent on 700 new football pitches to support the development of grassroots football, along with £1.2 million towards the women's European Championship, which is set to be hosted by England in 2022.#8 Super-Deduction policy
This is designed to encourage investment into the UK and boost its recovery from the pandemic. Under the scheme, companies investing in qualifying new plant and machinery will benefit from a 130% first-year capital allowance.
Investing companies will also benefit from a 50 per cent first-year allowance for qualifying special rate (including long life) assets. This upfront super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. This will be especially popular in the manufacturing, construction and Utilities industries.
#9 Stamp duty holiday
The stamp duty holiday on purchases in England and Northern Ireland has been extended to 30 June. .
After this date, the starting rate of stamp duty will be £250,000 until the end of September. Stamp duty will then return to the usual level of £125,000#9b The new mortgage guarantee scheme
To support first time buyers and people who are struggling to get on the property ladder, the government will provide a guarantee to lenders who offer mortgages with a deposit of just 5% on properties up to £600,000..
From April, Lloyds, NatWest, Santander, Barclays and HSBC will be offering 95% mortgages, with other lenders including Virgin Money expected to launch products later.#10 The recovery – spend now, tax later.
Personal
No changes to rates of income tax, National Insurance or VAT The tax-free personal allowance will be frozen at £12,570 from April 2021 to 2026 Higher rate income tax threshold to be frozen at £50,270 from April 2021 to 2026 Inheritance tax thresholds, pensions lifetime allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-2026Businesses
Most SME’s breathed a sigh of relief when the Chancellor announced that Corporation tax would stay at 19% for the 1.5 million companies whose profits are less than £50,000. A business that has profits between £50,000 and £250,000 will be aligned to a tapered scale of Corporation Tax from 20% through to 24%. And… for companies who achieved profits of above £250,000, their Corporation tax will increase to 25%.