UK BUDGET 2021

UK Budget 2021 Key Points

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UK BUDGET 2021 KEY POINTS

 

The Chancellor Rishi Sunak has announced a £5bn scheme for High Street shops and hospitality firms in England on new Covid grants, Restart loans, and dates in the Spring Budget. The number of ongoing supporting packages for businesses

  • The government hopes to claw back some of the coronavirus support given to businesses by way of increasing corporation taxes on company profits to 25%. The move has been branded a smash and grab on business by many UK newspapers, however, it will only come into place from April 2023 and is limited to companies declaring profits of more than £250,000. At the same time, a small profits rate of 19% will be introduced for companies with profits below £50,000.
  • For two years from April 2021, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance.
  • The coronavirus job retention scheme (CJRS) will be extended in full until the end of June 2021 and then phased out over the following three months.
  • The self-employed income support scheme will also be extended at its current level with a fourth grant covering the period February to April. A fifth grant will cover following three months, but this will be at a lower level for those who have seen less than a 30% drop in turnover. Eligibility for the SEISS will be extended to include those who became self-employed in 2019/20.
  • Self-employed people affected can apply for grants for the period February to April, providing 80% of their average trading profits. A further grant will be available from May 2021.
  • The personal allowance and higher rate threshold will rise to £12,570 and £50,270 for 2021/22 and will then be frozen for the next four years. It will level to 2026.
  • Higher rate income tax threshold to be frozen at £50,270 from April 2021 levels to 2026.
  • The capital gains tax annual exemption, the inheritance tax rate nil rate band and the lifetime allowance will all be frozen at their current levels until April 2026.
  • The business rates holiday for retail, hospitality and leisure businesses will be extended for three months and then reduced to a 66% relief until the end of March 2022.
  • The temporary 5% VAT rate for hospitality, hotel and holiday accommodation and admission to certain attractions will be extended to the end of September 2021 and then replaced by a 12.5% rate until 31 March 2022.
  • The exemption from stamp duty land tax on the first £500,000 of residential property value will be extended to 30 June and then replaced by a £250,000 exemption until 30 September 2021.
  • A new residential mortgage guarantee scheme will run from April 2021 to December 2022, aimed at increasing availability of 91%-95% loan-to-value mortgages. The mortgage guarantee scheme will see the government ‘guaranteeing’ 95% mortgages for buyers with 5% deposits. The maximum property value will be £600,000 and mortgages must be arranged on a repayment basis.
  • Fuel duty was frozen again this year, alongside alcohol duties which are frozen for the second year running.
  • From April, a new Restart grant will be available to help businesses to reopen. For premises with a rates account non-essential retail will get between £2667, and £6,000 per premises depending on rateable value. Hospitality & leisure including personal care and gyms will get between £8,000 and £18,000 per premises depending on rateable value. The guidance has not been issued by the Government and payments cannot be made until April. More information to follow and it may require a new application.
  • To replace Bounce back and CBILS loans, a new Recovery Loan Scheme will be available. Businesses of any size can apply for a loan of £25, 000 up to £10m to the end of 2021.

Read more about the Chancellor’s budget on the GOV.UK website.