Chancellor Rishi Sunak set out a Budget to protect businesses through the pandemic, fix the public finances and begin building the future economy. The Chancellor once again pledged to do ‘whatever it takes’ during the COVID-19 pandemic.
In summary, the budget comprised two main parts…
Proposed Tax Changes
- Freeze the Personal Tax threshold at £12,570 – the level where no tax is paid until April 2026.
- Freeze the Higher Rate Tax level to start at £50,270 until 2026.
- Capital Gains Tax allowance, Inheritance Tax allowance, and VAT threshold to be frozen until April 2026.
- Corporation Tax to increase to 25% from April 2023 for profits above £250,000. A rate of 19% for profits below £50,000 with tapering in between.
- Tax relief on Capital Investment called a “super deduction” up to 130% of the cost to encourage business investment.
Protect jobs and livelihoods affected by Coronavirus
- Extend Furlough (CJRS Scheme) to 30th September 2021.
- Two new SEISS Grants, one for February to April 2021 and the second covering May to September 2021. Newly Self-Employed to qualify.
- Restart Grants of £6,000 for Retailers and up to £18,000 for Hospitality.
- Extend Rates Relief for closed businesses.
- Reduced VAT in Hospitality of 5% to 30th September 2021 and then 12.5% to 31st March 2022.
- Stamp Duty extensions to 30th June 2021.
- Living Wage to increase to £8.91.
So how will this affect you?
If you’re buying or selling a house:
Stamp Duty Holiday Extended
The stamp duty nil rate band on residential properties in England up to £500,000 will continue until the end of June. It will taper to £250,000 until the end of September, and then return to the usual level of £125,000 from 1 October.
The current £500,000 nil-rate band in England will apply until 30th June 2021.
* Between 1 July and 30 September, it will be reduced to £250,000
* from 1 October, the previous threshold of £125,000 will be reinstated
What does this mean in practice?
This means that people buying before 1 June will save up to £15,000, while those buying between 1 July and 30 September will save up to £2,500 in tax.
The extension will provide those who have already agreed sales to complete their purchase and benefit from the Stamp Duty Holiday.
First Time Buyers’ Relief, which has no effect while the nil rate band is £500,000, will resume from 1 July 2021.
Mortgage Guarantee Scheme (95% Mortgages)
The government will introduce a new mortgage guarantee scheme in April 2021. This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of 5% on homes with a value of up to £600,000. Under the scheme, all buyers will have the opportunity to fix their initial mortgage interest rate for at least five years should they wish to. The scheme, which will be available for new mortgages up to 31 December 2022, is designed to increase the availability of mortgages on new or existing properties for those with small deposits.
Capital Gains Tax (CGT) Freeze
No increase was made to capital gains tax (CGT) rates, but the annual exempt amount for CGT will be frozen until 2026.
The annual capital gains tax allowance will stay at £12,300
Our friendly team in our Conveyancing department can help you make the most of these opportunities. Give them a call today.
If you run your own business:
From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
In addition Restart Grants will be provided in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
100% business rates relief for eligible retail, hospitality and leisure properties in England 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.
An extension of the reduced VAT rate for Hospitality Businesses until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
Coronavirus Job Retention Scheme (CJRS) scheme extended to 30 September 2021. The level of grant available to employers under the scheme will stay the same until 30 June 2021. From 1 July 2021, the level of grant will be reduced and employers will be asked to contribute towards the cost of furloughed employees’ wages. To be eligible for the grant an employer must continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough. The reduction in the level of the grant means that the percentage recovery of furloughed wages will be as follows:
• for July 2021 70% of furloughed wages up to a maximum of £2187.50 and
• for August and September 2021 60% of furloughed wages up to a maximum of £1,875.00.
Employers will need to continue to fund employer NICs and mandatory minimum automatic enrolment pension contributions.
Income Support for Self-Employed:
The Self-Employment Income Support Scheme (SEISS) has also been extended, with two further grants this year. Claimable by the self-employed who have filed their tax return for 2019/20 by midnight on 2 March 2021, which should include the newly self-employed from 6 April 2019 provided they have filed their 2019/20 tax return.
Payments for employers who hire new apprentices
Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.
This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.
Make sure your business is prepared for these changes. Our Employment Law team can help you make the most of these latest measures.