This week, the Chancellor announced extensions to a number of current COVID-19 schemes, alongside additional support for individuals and businesses, as the UK continues to navigate the impact of the pandemic.

We have sought to summarise some of the immediate key measures for employers below, and we have also included a very brief synopsis of 2021/22 tax changes..  

If you want to know more detail about the Budget, follow this link: www.gov.uk/government/publications/budget-2021-documents

 

  1. Coronavirus Job Retention Scheme (CJRS)
  • The CJRS Scheme has been extended until the end of September 2021.
    • Employers will continue to pay their furloughed employees associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.
    • When claiming for periods from 1 May 2021 onwards, eligible employees must have been employed on 2 March 2021 and been included upon a Real Time Information (RTI) submission to HMRC notifying a payment of earnings for that employee between 20 March 2020 and 2 March 2021.
  • Until June 2021
    • 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
  • For July 2021
    • CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50.
  • For August & September 2021
    • CJRS grants will then reduce to 60% of employees’ usual wages, up to a cap of £1,875.

 

  1. Self-Employment Income Support Scheme (SEISS)
  • The eligibility criteria for the fourth SEISS grant has now been confirmed; the Chancellor also announced a fifth and final grant.
    • The eligibility criteria for these grants have been updated to take into account 2019/20 self-assessment tax returns, which must have been filed by 2 March 2021.
    • Some newly self-employed taxpayers who were not eligible for the first three grants will consequently be eligible for the final two grants.
  • The fourth SEISS grant
    • has been set at 80% of three months’ average trading profits and is capped at £7,500.
    • HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late-April to the end of May 2021.
  • The fifth grant
    • has been set at 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more.
    • Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850.
    • Applications are expected to open in late July.

 

  1. The VAT Deferral Payment Scheme
  • The new payment scheme helps businesses with deferred VAT to pay in smaller, monthly instalments from March, interest free;
  • The scheme is now open, and you can choose to make between 2-11 monthly payments, depending on when you join.
    • The later you join the fewer instalments are available to you;
    • You can join the Scheme through an online service without needing to contact HMRC.

www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

  • You must join the scheme before the end of June if you want to make use of this Scheme.

 

  1. Extended Loss Carry Back For Business
  • To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years.
  • This carry back rule will be available for both incorporated and unincorporated businesses.

 

  1. Capital Allowances
  • From 1 April 2021 to 31 March 2023, a “super deduction” of 130% will be available to companies incurring expenditure on qualifying plant and machinery (P&M).
  • This will generate a reduction in tax of 7p for every £1 pound spent.
  • There are some exclusions to the assets eligible for the relief, broadly those that have been excluded from first year allowances in the past as well as used and second-hand assets and expenditure on contracts entered into prior to 3 March 2021 even if expenditure is incurred after 1 April 2021.
  • Expenditure on special rate assets (eg, hot and cold water systems and other ‘integral assets’) will attract a 50% rate and a 9.5p tax reduction.

 

  1. Business Rates Holiday 
  • The Chancellor also announced a three-month extension of the business rates holiday from 1 April 2021 to 30 June 2021.
  • Thereafter, for the remainder of 2021/22 (ie, nine months) businesses will enjoy 66% rates relief up to a cap of £2m per business.

 

  1. Stamp duty land tax (SDLT)
  • The temporary increase in the residential SDLT nil rate band to £500,000 in England and Northern Ireland is extended until 30 June 2021.
  • The nil rate band will then reduce to £250,000 until 30 September 2021 before returning to £125,000.

 

  1. VAT Reduction for the UK’s Tourism and Hospitality Sector
  • HMRC have extended the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021;
  • To help businesses manage the transition back to the standard 20% rate, a 5% rate will apply for the subsequent six months until 31 March 2022.

 

  1. Continuation of the Home Office Equipment Expenses COVID-19 Easement
  • An Income Tax exemption and corresponding NICs disregard were introduced for the 2020-21 tax year to allowed employers to reimburse employees for the cost of home office equipment deemed necessary to work from home as a result of the COVID-19 outbreak free from Income Tax and Class 1 NICs.
  • The exemption was due to end on 5 April 2021 but will now be extended to have effect until 5 April 2022.

 

  1. Tax rate changes 2021/22 And Beyond
  • Personal Allowance and Higher Rate Threshold (HRT)
    • The income tax Personal Allowance
      • will rise with CPI as planned to £12,570 from April‌‌‌ ‌2021; and
      • will remain at this level until April 2026.
    • The income tax Higher Rate Tax Allowance
      • will rise as planned to £50,270 from April 2021; and
      • will remain at this level until April 2026.
    • Corporation Tax
      • The rate of Corporation Tax will increase from April 2023 to
        • 25% on profits over £250,000;
        • The rate for small profits under £50,000 will remain at 19%; and
        • there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.
      • Pensions Lifetime Allowance
        • The Lifetime Allowance will remain at its current level of £1,073,100 until April‌‌‌ ‌2026.

Barrons has put together a helpful guide to running your business during the coronavirus crisis.