Sunak’s Budget Announcement – What does it mean for you and your business?
The Government’s budget has recently been announced, with updates made to several aspects, including income and corporation tax, and an extension to the furlough scheme put into place.
What does the new budget mean for you and your business?
Extension to Furlough Scheme and Self-Employment Income Support Scheme
The Furlough Scheme and the Self-Employment income support scheme have both been extended to September 2021.
Furloughed employees will continue to receive 80% of their wages until the scheme ends, but as the scheme is gradually phased out towards the end of the year, employers will be required to begin making contributions of 10% in July, and 20% in August and September.
£5 billion has been assigned to new Restart Grants, which will provide a one-off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care, and gym businesses in England.
Apprenticeship Hiring Incentive
The apprenticeship hiring incentive in England has been extended to September 2021, offering an increase in payment of £3,000.
The Chancellor announced that no changes will be made to income tax rates or national insurance rates, whilst personal income tax allowance is set to be frozen at £12,570 from April 2022 to April 2026, with the threshold for higher rate income tax also frozen, being kept at £50,270 from 2022 to 2026.
We are set to see a corporation tax rise on company profits in April 2023, when it will increase from 19% to 25%.
The rate is set to be kept at 19% for smaller companies with profits of less than £50,000, and will be tapered so that only businesses with profits exceeding £250,000 per year will be taxed at the 25% rate.
The rules for carrying back losses will also change. Businesses can currently carry back losses for 12 months, but this will be extended to 36 months.
Set to start in April 2021, the new super-deduction will cut companies’ tax bill by 25p for every £1 they invest in new equipment. With companies able to deduct investment costs from tax bills, the taxable profits will be reduced by around 130%.
This move will be worth around £25 billion to UK companies over the two-year period the super-deduction will be in effect.
Hospitality businesses will benefit from a reduced VAT rate of 5%, which will be maintained until September. From September onwards, an interim 12.5% rate will apply for the following six months.
Other budget announcements
Stamp Duty Holiday
The stamp duty holiday that was first introduced in July 2020 in a bid to boost the UK property market will be extended to June 2021, with homebuyers relieved from paying stamp duty on all property purchases up to the value of £500,000.
The new mortgage guarantee scheme will allow buyers to purchase a property with a small deposit of just 5%, guaranteeing a loan of up to 95% on properties valued up to £600,000.
Looking for advice?
DRN’s specialist HR and Employment Law team are dedicated to providing sound, reliable business advice that you can trust. For more information surrounding best business practices in the current climate, please contact a member of our tema on 01282 433241.