Budget 2021 – Emerging from Lockdown 3
Chancellor of the Exchequer Rishi Sunak today set out the Government’s spring Budget 2021 as the country looks to emerge from its third national lockdown and recover from the impact of the coronavirus pandemic.
The Budget focusses heavily on restarting the economy and provides a significant boost for businesses and workers struggling as a result of Covid-19. However, the Chancellor has warned that “once we are on the way to recovery, we will need to begin fixing the public finances” signalling tax rises on the horizon.
The Coronavirus Job Support Scheme has been extended once again to September 2021, as has the UK Self Employment Income Support Scheme. Small and medium-sized employers in the UK will continue to be able to reclaim from the Government up to two weeks Statutory Sick Pay costs per employee.
£5 billion has been put towards the new Restart Grant, a one-off cash grant of up to £18,000 for businesses in the hospitality, accommodation, leisure, personal care and gym sectors in England. VAT will remain at 5% for hospitality, accommodation and attractions across the UK until the end of September 2021. Following that, VAT will be set at 12.5% for a further six months until 31 March 2022. 750,000 businesses in the retail, hospitality and leisure sectors in England will also be eligible to benefit from business rates relief.
Further, a UK-wide Recovery Loan Scheme will be implemented which will allow for businesses of all sizes to take out loans between £25,001 and £10 million as well as asset and invoice finance between £1,000 and £10 million.
Theatres, museums and other cultural organisations in England will receive an additional £300 million boost through the Culture Recovery Fund. Recognising the importance of cashflow, the Government have extended the ‘loss carry back rules’ from one year to three for losses of up to £2 million, enabling businesses to claim tax repayments which will provide essential cash flow support.
The rate of Corporation Tax will increase to 25% however in order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less will continue to be taxed at 19%. A tapered rate will be introduced for profits above £50,000 so that only those businesses with profits of £250,000 or more will be taxed at the full 25% rate.
The Budget 2021 does set aside £100 million towards a new Taxpayer Protection Taskforce to crack-down on businesses exploiting the support schemes and defrauded the taxpayer.
As predicted, there will be an extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until June 2021 which aims to fortify the continued recovery of the housing market. Further, a new Mortgage Guarantee Scheme will be introduced to secure all UK homebuyers a mortgage of up to £600,000 with a 5% deposit.
The Chancellor has made clear that this is to be an investment-led recovery, unveiling several new investment schemes.
From April 2021, the new super-deduction (which lasts for a period of 2 years) will cut companies tax bill by 25p for every pound invested in new equipment, worth around £25 billion to UK businesses.
The ‘Future Fund: Breakthrough’ will make available £375 million in funding to highly innovative businesses and companies such as those working in life sciences, quantum computing or clean tech. A new ‘Help to Grow’ scheme will be introduced, offering up to 130,000 companies across the UK a digital and management boost. The Government will launch a review of Research & Development tax reliefs to make sure the UK remain a competition location for cutting-edge research.
Over £1 billion will be made available for a further 45 towns in England through the Town Fund with the aim of supporting their long-term economical and social regeneration as well as their immediate recovery from the impact of Covid-19.
The Government have also outlined plans for at least £15 billion of ‘green gilt issuance’ in the coming financial year to help finance critical projects tackling climate change and other environmental challenges as well as fund important infrastructure investment and create ‘green jobs’ across the UK.
If you have any questions on how Budget 2021 may affect your business or if you need legal support over the coming period, please do not hesitate to email or phone us on 0113 207 0000.