With over 20 million people now vaccinated across the UK and a roadmap out of lockdown in place, we take a look at what was announced in today’s budget to help the economy get back on track.
Job support scheme (Furlough)
As expected, the furlough scheme, currently paying up to 80% of people's salaries, will be extended until the end of September. Under the latest extension, there are no changes for employees but employers will be asked to contribute 10% of hours staff do not work in July, and 20% in August and September as the economy begins its recovery.
Self Employed Income Support Scheme (SEISS)
An additional 600,000 more self-employed people will be eligible for support as long they have filed a tax return as access to the grants have widened. The scheme now allows those who filed a tax return in 2019/2020 to be able to claim for the first time.
A fourth SEISS grant that runs from February to April will pay 80% of average trading profits, based on a three month period. Those whose turnover has fallen by 30% or more will continue to receive the full 80% of profits, up to £7,500, whereas those who have seen a smaller loss will receive 30% of trading profits, capped at £2,850.
The chancellor also announced that a fifth grant will be added from May onwards with applications opening in late July.
The current VAT deduction to 5% will be extended for the hospitality sector until 30 September 2021. After this date, there will be an interim rate of 12.5% for another 6 months, which means that the VAT rate of 20% will not be reinstated until April 2022.
Corporation tax will increase from 19% to 25% from April 2023. However, this increase will only be added to those who show a profit of over £250,000. A small profits rate of 19% will be maintained for those with profits of £50,000 or less, with a tapered approach between the two thresholds.
The small profits rate means that 1.4million small businesses across the UK will see no increase in their corporation tax.
The current business rate holiday has also been extended until June 2021.
£5billion in new grants for businesses affected by the latest lockdown has been announced. £6,000 will be made available for non-essential retail that is set to open on 12 April and up to £18,000 will be available for businesses set to open after this date, such as leisure and hospitality venues.
Help to Grow
As part of a £520m plan to spur innovation and growth, the Chancellor announced the Help to Grow scheme, which will offer leaders of small to medium-sized companies the chance of management training.
They can also access a Help to Grow digital scheme that gives free expert technical advice and a 50% discount on digital productivity-enhancing software at up to £5,000 each.
Businesses can register for the new help to grow scheme via https://helptogrow.campaign.gov.uk/
Traineeship budget and ‘flexi-job’ apprenticeship scheme
In a bid to support young people getting into or back into work, the Chancellor is offering employers incentive payments of £3,000 to take on new apprentices.
HMRC and business registration
Rishi announced that there would be no increase to the current VAT registration threshold of £85,000, but did put forward that HMRC is looking to hire around 1,000 new investigators to crack down on tax avoidance.
Starting in April, a new super-deduction will cut companies tax bills by 25p for every £1 that they invest in new equipment. This could be worth around £25billion to UK companies over the next two years that the deduction is set to run for.
Personal tax thresholds and income tax
The Chancellor announced that there would be no increase in income tax across the UK and that we would also see an increase in the personal tax and higher rate thresholds from April 2022 that will not change until 2026.
The £20 increase that was added to Universal Credit last year has been extended until the end of September 2021.
National Living Wage
The chancellor also announced that there would be a UK wide increase in the national living wage to £8.91, a 2.2% increase from April.
An increase in contactless payments to £100 has been agreed and will be effective as of later this year.
To get a full overview of the budget, head to https://www.gov.uk/government/news/budget-2021-what-you-need-to-know