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The Key Points Of The 2021 Budget For Businesses

The Key Points Of The 2021 Budget For Businesses

Earlier this month the Chancellor for the Exchequer, Rishi Sunak, presented the 2021 budget. It looked at tax and spending budgets for the year ahead. The 2021 budget also included support for the financial burdens of the pandemic.

But, how does the 2021 budget affect your business? That’s what we look at in this blog post.

Coronavirus Business Support

  • Furlough has been extended until the end of September 2021. Employers are expected to contribute 10% towards furlough payment in July and 20% in August and September.
  • The support for self-employed people has been extended until September. Access to these grants has been widened and around 600,000 more people are eligible.

Taxation Changes

  • There are no changes to the rates of income, national insurance or VAT.
  • Personal income tax allowance has been frozen at £12,570. This will also be the rate it is frozen at from April 2022 until 2026. The higher rate income tax threshold has also been frozen. It has been frozen at £50,270 and will stay here for the same period as the personal income tax allowance.
  • The corporation tax on company profits is set to rise from 19% to 25% in April 2023. Rates will be kept at 19% for around 1,5 million smaller companies that have profits of £50,000 or less.
  • There are no changes to inheritance tax, lifetime pension allowance or capital gain tax allowances.

Business Support

  • There will be a tax break for firms to ‘unlock’ £20bn worth of business investment. Firms will be able to ‘deduct’ investment costs from tax bills. This will reduce taxable profits by 130%.
  • The VAT rate for businesses in the hospitality industry will stay at the reduced rate of 5% until September. In September there will be an interim of 12.5% VAT rate for the following six months until it returns to the normal VAT rate.
  • The business rates holiday for firms in England will continue until June. After this time there will be at 75% discount.
  • Restart grants will be available for shops and other businesses that were forced to close. This is up to £6,000 per premises for non-essential outlets due to reopen in April. £18,000 is then available for gyms, personal care providers and other hospitality or leisure industry businesses.

If you’re not sure how the 2021 budget affects your business or finances, contact our team of friendly accountants in Peterborough. We will discuss anything you need to be aware of and recommend any grants you could be legible for too.

What You Should Know About Your Taxes as a Business Owner

As a business owner, corporate tax issues will be part and parcel of your routine and one of the main  tasks that your accountant will have. If you are a director of a limited company, the tax issues responsibility falls on you. You have to make sure that the business’s tax issues are in order and that the tax liability is accurate. This also includes ensuring that HMRC is paid on time.

What is Corporation Tax?

Corporation tax is based on limited companies and their taxable income or the profits they make. As the owner of one you need to calculate this yourself and you need to pay the amount to the Inland Revenue without an assessment beforehand. The payment date is 9 months and 1 day after the due date of the business and this is usually the very last day of the accounting period itself.

The good news is that this tax rate will be cut from 20% to 17% come 2020 according to the government. The accounting period cannot be more than 12 months for this tax and it is usually the same financial year that your business’s annual accounts fall under. The duration also has an effect on your deadlines and filing your tax returns.

You can check your accounting period by logging onto the online service for HMRC and by checking the dates there. Once your business is registered for Corporation Tax, the HMRC will send you a letter for your exact accounting period.

What is Value Added Tax?

Value Added Tax or VAT is tax that is based on the consumption of certain services and goods that are accumulated through each stage of distribution and production. In other words, most services and products that come from a business will be accountable for this tax. The standard VAT rate is 20% but this can change according to the business you have. You should register for VAT if:

  • The total value of taxable supplies or services within 12 months is more than the registration threshold (which amounts to about £85,000).
  • If the forecast value of said supplies in the next 30 days or so may be more than the threshold.

The amount includes not only the profits you gain but also the amount that is being spent on the business and going through it. The returns have to be submitted online and the good news is that any and all liabilities can be settled electronically.

AK Book-keeping can help you with all of that and more.  We are based in Peterborough and have been in the book-keeping business for decades.

If your paperwork is taking you away from things that should have your undivided attention, then you know who to turn to. Allow us to manage your books so that you can manage your business with little or no distractions. Satisfaction guaranteed!

 

Call Les’ Hotline: 07732090847

Email: Les@akbook-keeping.co.uk

www.akbook-keeping.co.uk

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