It was the Budget we’ve all been waiting for. With the UK now on the path out of the pandemic, the announcements have arguably never been more important to businesses.
Amid cash injections and scheme extensions, Chancellor Rishi Sunak revealed that there is hope for the UK economy. It is predicted to return to pre-COVID levels by the middle of 2022 (six months earlier than previously anticipated), and annual growth fixed to bounce back by 4% this year, and then 7.3% next year.
Here, we take a look at what was announced and the impact it may have on businesses like yours.
The Coronavirus Job Support Scheme (or furlough scheme) will be extended from the end of April until the end of September in a bid to further help protect jobs and businesses. As businesses reopen, it’s planned that employers will contribute 10% to wages in July, and then 20% in August and September, before the scheme ceases completely.
£5bn has been set aside for restart grants. These one-off payments will be made to shops and other businesses in England that were forced to close – up to £6,000 for non-essential businesses reopening in April and up to £18,000 for those in the hospitality and leisure industries.
On top of this, a Recovery Loan Scheme will be introduced, which will provide loans between £25,001 and £10m, and asset and invoice finance between £1,000 and £10m.
Organisations will still be able to access the business rates holiday for the first quarter of the new tax year. Following this, rates will be discounted by two-thirds until April 2022, resulting in a £6bn tax cut for businesses.
The present 5% VAT cut will be extended until 30th September 2021 for hospitality businesses. This won’t revert back to 20% straight away, though – there will be an interim rate of 12.5% until April 2022.
Income Tax, National Insurance and VAT will see no changes to their rates. Whilst the Personal Allowance will still rise to £12,570 this year, and the higher-rate tax threshold will bump up to £50,270, they will freeze both from April 2022 until 2026. This means the incremental benefits that usually accompany increases in thresholds will no longer be felt for some time.
It’s also worth noting that Corporation Tax is planned to rise from 19% to 25% in April 2023. However, this only applies to companies earning a profit of at least £50,000. There will also be a taper, so that just businesses with profits that exceed £250,000 will pay the full 25% rate. Businesses that report losses need not panic – the government will provide extra relief over the next tax year.
In other news, the National Living Wage will increase from £8.72 to £8.91 in April, and incentive grants for apprenticeships will increase to £3,000. Additionally, fuel duty was frozen for the 11th year in a row. £100m will also go into funding a taskforce to tackle COVID fraud.
The government will be rewarding those that invest in innovation and technology as part of their recovery too. From April 2021, there will be a new ‘super-deduction’, which will reduce a company’s tax bill by 25p for every pound they spend on new equipment. What’s more, a ‘Help to Grow’ scheme will provide up to 130,000 companies with free or subsidised digital and management training and discounts on software. This will launch in the autumn of 2021.
As you can see, there’s a lot to take in from this year’s Budget. Whether you need some help understanding what applies to you, or accounting support to help you navigate through these still-uncertain times, we are here for you.
From your own budgets and forecasts to management accounts or the use of cloud software, Nabarro Poole is the expert to turn to for all things accounting – this year and beyond. Get in touch with us to find out how we can support your business.