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.
- 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.
- 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.