Last week the Chancellor highlighted the impact of the pandemic shrinking the economy by 10%
There were no rises in income tax, national insurance or VAT.
The Chancellor also noted that additional funds would be put aside for HMRC investigators to identify fraud relating to coronavirus support measures.
Below is our summary of the key points. As always please feel free to contact us for specific advice to your situation.
FURLOUGH SCHEME (CJRS)
The furlough scheme will continue until September 2021.
This will remain as is with the Government covering up to 80% of Salary for hours not work up to £2,500 per month.
As it did last year the support levels will drop going forward. From July the support level will drop to 70% and August and September 60%.
SELF EMPLOYMENT INCOME SUPPORT SCHEME (SEISS Grants)
The SEISS has been extended to cover 2021 periods February to April and May to September, being referred to as grants 4 and 5.
Previous claims were based on 2018/19 Self Assessment Returns. The 2019/20 Returns are now to be considered. This means people starting self employment in that year will now qualify.
The 4th grant will be at 80% of average profits very similar to the previous grants but will also factor in the 2019/20 Self Assessment Returns.
The 5th grant will be more complex and based on whether turnover has dropped more than 30% over the pandemic.
As with previous grants we are here to advise on your position and will do so automatically as they come up and we know the full calculation.
This was the big tax movement. This has been increased to 25% for profits above £50,000. This starts from April 2023 which gives plenty of time to plan out the optimum position.
The 5% rate for hospitality will be extended until September 2021. After that a rate of 12.5 will be introduced until April 2022.
The VAT Threshold remains £85,000.
130% SUPER DEDUCTION FOR INVESTMENT
This will apply from April 2021 for two years.
When a business purchases any qualifying plant and machinery they will be able to offset 130% of the cost in the first year rather than the current 100%. Special rate assets will qualify for 50% first year allowances.
HMRCs headline on this was that for every £1 spent companies will be able to cut their tax bill by up to 25p.
It is a nice addition, but it is not as big a change as the headline suggests.
CARRY BACK OF TRADING LOSSES FOR CORPORATION TAX AND INCOME TAX
There will now be the ability to carry back trading losses incurred 1 April 2020 and 31st March 2022 up to 3 years. This applies to companies and individuals.
Personal Allowance will increase from £12,500 to £12,570 and will remain at that level for 5 years.
The Higher Rate Threshold will increase from £50,000 to £50,270 and again will remain that way for 5 years.
BUSINESS RATES HOLIDAY
The business rates holiday will continue until June 2021.
In the hospitality and leisure sector there will also be a discount for the remainder of the year, of up to two-thirds.
Grants continue through local councils with a view to help businesses open back up again.
Hospitality and leisure will receive a higher level of grant than non essential retail business.
The current cut in Stamp Duty will now continue until 30 June 2021.
GOVERNMENT BACKED MORTGAGES
In an attempt to help first time buyers 95% Loan to Value mortgages will be backed by the government.
RECOVERY LOAN SCHEME
A new loan scheme will be launched and will be similar to the current CBILS scheme.