Budget 2021
On 3rd March 2021 the Chancellor presented his Budget.
We’ve rounded up some of the key areas of interest to our clients.
Furlough
First up is the extension to the furlough scheme.
Furlough is being extended to September 2021. For May and June employers can claim 80% of pay for hours not worked, up to a cap of £2,500. In July employers can only claim 70% (with a cap of £2,187.50) and in August and September employers can only claim 60% (with a cap of £1875). In all months employees must still receive 80%.
The furlough scheme is also opening up to new employees who previously weren’t eligible. For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods starting on or after 1 May 2021.
VAT
Hospitality
Last year a temporary 5% VAT rate was introduced to benefit the hospitality industry. This temporary reduced rate of 5% will be extended to 30 September 2021.
From 1 October 2021 the reduced rate will be replaced by a new reduced rate of VAT of 12.5% until 31 March 2022.
The following supplies, which already currently benefit from the 5% reduced rate, will continue to benefit from the reduced rates through the extension:
- food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
- hot takeaway food and hot takeaway non-alcoholic beverages
- sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
- admissions to the following attractions that are not already eligible for the cultural VAT exemption such as: theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions, similar cultural events and facilities. Where admission to these attractions is covered by the existing cultural exemption, the exemption will take precedence.
The types of supplies that the relief applies to will remain unchanged when the new temporary 12.5% rate is introduced on 1 October 2021.
VAT registration threshold
The VAT registration and deregistration thresholds will not change for 2 years from 1 April 2022.
The taxable turnover threshold, which determines whether a person must be registered for VAT, will remain at £85,000 until 31 March 2024.
The taxable turnover threshold, which determines whether a person may apply for deregistration, will remain at £83,000 until 31 March 2024.
Corporation tax
From April 2023 the rate of corporation tax paid on company profits will increase from 19% to 25%. Companies with profits under £50,000 will remain at 19%. And there will be a taper above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.
Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%, giving companies a tax cut based on investments made between 1 April 2021 and 31 March 2023.
From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:
- a 130% super-deduction capital allowance on qualifying plant and machinery investments
- a 50% first-year allowance for qualifying special rate assets
Grants
The Restart Grants scheme means that non-essential retail businesses will receive grants of up to £6,000 per premises, as they will be allowed to open first. Hospitality and leisure businesses, including personal care and gyms, will get grants of up to £18,000.
Business rates
Eligible retail, hospitality and leisure properties in England will continue to receive 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
Other points of interest
The contactless payment limit will rise to £100 later this year, a really practical impact for our clients accepting card payments from their customers.
There’ll also be a freeze in duty rates for beer, cider, wine and spirits.
Culture Recovery Fund – The government will provide £300 million to extend the Culture Recovery Fund to continue to support key national and local cultural organisations in England as the sector recovers.