This blog was guest-written by Andy Tree, Top Branch Accountants MD, and SiGNAL BiZHUB member
The Chancellor of the Exchequer Rt. Hon. Rishi Sunak MP unveiled the 2021 budget, here is the official link: https://www.gov.uk/government/news/budget-2021-what-you-need-to-know .
Since this afternoon, I have been digesting the budget and trying to pull out the useful bits - especially for small businesses.
Self-employed scheme (SEISS)
This is NOT for limited company directors/shareholders/employees, who are not strictly self-employed. However, if you are self-employed, the scheme is extended: https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension
The big change here is that businesses that started trading in 2019 - 2020 are now eligible for the 4th SEISS grant becoming available in April, and the 5th grant which will be available in the summer. However, the percentage impact that Covid 19 restrictions have made on your business turnover overall are now factored into the calculation.
There has been a lot of concern about corporation tax going up to 25% from the current 19%, from 2023. However, it has been clarified that corporation tax rates will also be tiered for the first time with firms making an annual profit of £50,000 or less continuing to pay the current 19% rate.
Rates will then be tapered up to £250,000 profits when companies will pay the new 25% rate from 2023.
The Coronavirus Job Retention (Furlough) Scheme (CJRS)
The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021, which can be utilised by limited company directors (on the payroll by required deadlines mentioned in this section), including those on the annual payroll scheme.
The Government will continue to pay 80% of employees' usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
For periods in July, CJRS grants will cover 70% of employees' usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees' usual wages up to a cap of £1,875.00
You will need to continue to pay your furloughed employees (including directors, and sole directors) at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. This means, for periods between July and September, you will need to fund the difference between this and the CJRS grants yourself. You can also top up wages above the 80% if you wish, but you are not required to do so.
You must continue to pay the associated Employer National Insurance contributions and pension contributions (if applicable) on subsidised furlough pay from your own funds. This may not affect a company director paying a small salary under NI threshold.
CJRS eligibility from May: For periods from 1st May 2021 onwards, you will be able to claim for eligible employees who were employed by you and on your PAYE payroll on 2 March 2021. This means you must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.
You and your employees (including directors) do not need to have benefited from the scheme before, to make a claim, if you meet the eligibility criteria.
There is also an option to 'flexi furlough' e.g., a director who is working 50% of their usual hours could make a 50% claim (a claim for 50% of the 80%.)
Furlough claim is for salary only and does not include dividends.
VAT Deferral from 2020
If you deferred VAT payments due between 20 March 2020 and 30 June 2020 and still have payments to make, please read this link, which now shows what you need to do and options available:
Bounce Back Loan Scheme
Deadline to apply/top up is 31st March: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan .
If anyone is concerned about repaying a bounce back loan, please get in touch with Andy for guidance.
New Recovery Loan Scheme
A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery. More info will be released in due course and current known details can be found here:
Plans were announced to offer those businesses classed as 'non-essential retailers' - due to re-open on 12th April - restart grants of up to £6000 per premises.
Businesses having to wait longer to resume business, such as gyms and hospitality venues, may be eligible for grants of up to £18,000
VAT 5% for hospitality
Extension to the VAT cut to 5% for hospitality, accommodation, and attractions across the UK until the end of September , followed by a 12.5% rate for a further six months until 31 March 2022.
Business rates relief
750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief. This would be managed by the council listed on council tax/rates bill.
Company losses carried back
To further support the cashflow of businesses, the government is extending the loss 'carry back' rules, with details here:
- No changes to rates of income tax, national insurance, or VAT.
Tax-free personal allowance to be frozen at £12,570 from April 2021 levels to 2026.
The personal allowance generally covers the salary element of your income e.g., paid up to £9,500 threshold.
Higher rate income tax threshold to be frozen at £50,270 from April 2021 levels to 2026.
Fraud task force
Interestingly, the government have announced £100 million for a new Taxpayer Protection Taskforce (1000 staff) to crack-down on COVID fraudsters who have exploited UK Government support schemes. An employer that claims furlough payments is now listed in a public register.
Help to Grow
There are vouches available to SMEs who wish to do business management and digital training through our universities. You pay the first £750.00 of any course fee.
If you have any questions about any of the above, please let Andy know ([email protected])