In his recent Budget 2021 announcement, Chancellor Rishi Sunak set out the UK Government’s spending plans for the next fiscal year. It aims to start rebuilding public finances as we move out of the coronavirus pandemic whilst continuing to protect jobs and livelihoods. As such, it contains a mixture of measures, many of which relate to tax laws and Government support schemes, with significant implications for individuals and SMEs. Here’s what you need to know.
Government support schemes extended
- The Coronavirus Job Support scheme, otherwise known as the furlough scheme, will be extended to the end of September 2021. Employers will be asked to contribute 10% from July and 20% from August.
- The Self Employment Income Support Scheme will be extended to September 2021. It will also be widened so that 600,000 more people who filed a 2019-20 tax return before 2 March 2021 will be able to claim for the first time.
- From 1st April – 30th September 2021, employers in England will be able to claim £3,000 for each new apprentice they hire, of any age. An additional £126m funding will be made available for traineeships.
Future changes to tax laws
- In an effort to boost finances whilst continuing to support businesses, corporation tax will increase from 19% to 25% from 2023. Businesses with profits of £50,000 or less (around 1.5 million businesses in the UK) will continue to be taxed at 19%. A tapered system above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
- The income tax Personal Allowance (£12,570) and higher rate threshold (£50,270) will be frozen from April 2022 to April 2026. The upper earnings limit and national insurance contributions will remain aligned with the higher rate threshold.
- The £500,000 nil-rate band on stamp duty will be extended until the end of June. It will then drop to £250,000 until the end of September, before returning to £125,000 on 1 October 2021.
- The lower VAT rate for tourism and hospitality firms will be maintained at 5% until the end of September 2021. A rate of 12.5% will apply for the following six months, before returning to the standard 20% rate on 1 April 2022.
- Super deductions will be available from 1 April 2021 giving businesses extra tax relief on qualifying plant and machinery , allowing them to claim 130% as a capital allowance if the qualifying criteria are met.
How we can help
MCC Accountants is a Salford accountancy firm specialising in helping SMEs manage their finances. We have a dedicated team of tax experts who can help you to understand the tax implications of the Budget 2021 announcement. We can also find out if you are eligible for the Government support schemes and guide you through any complex paperwork. For more information on the Budget or any of the services we offer, call us on 0161 707 1500 or use the details on our contact page.