Budget 2021 – A summary for businesses

3rd March 2021 Corporate

Today’s budget has been announced almost a year since the first national lockdown commenced, a year which has seen many businesses and their turnovers affected by the Covid-19 pandemic. Below are some of the key points from today’s budget for businesses to consider whilst they go forward into the next financial year, and beyond.

Furlough Scheme

The furlough scheme, under which the government pay 80% of employees’ wages for the hours they can’t work, has been of paramount importance to businesses of all sizes during the pandemic and today’s announcement has confirmed that the scheme has been extended to the end of September 2021. However in the final few months of the extension, businesses will see the support being tapered out and will be required to contribute 10% of their furloughed employees’ wages in July, and 20% in August and September.

Minimum wage

The minimum wage will increase to £8.91 from April 2021.

Business rates exemption

In the past year, businesses in the retail, hospitality and leisure sectors have benefited from a business rates exemption. Today’s budget has confirmed that this measure has been extended for 3 months, until the end of June, after which eligible businesses will benefit from a two-thirds discount to business rates for the remainder of the financial year.

Grants and Loans for businesses

Businesses in the retail hospitality and leisure sectors may be able to apply for a Restart Grant, a one-off sum of up to £6,000 per premises for non-essential businesses reopening in April and up to £18,000 for gyms and certain hospitality and leisure businesses to help promote their financial recovery.

Although the Coronavirus Bounce Back Loans and Business Interruption Loans schemes have ended, a new Recovery Loan Scheme has been announced which will allow many businesses affected by the pandemic to obtain a loan to finance their growth and investment.

Corporation tax changes

In an effort to promote corporate investment, companies will benefit from a ‘super deduction’ tax break whereby they will be able to deduct 130% of the value of certain investments from their taxable income. However, from April 2023, corporation tax will be increased to 25% for companies with profits of more than £250,000. The rate is tapered down for businesses with profits of under £250,000, with the applicable rate remaining at 19% for companies whose profits do not exceed £50,000.

VAT

VAT-registered businesses will be able to continue to apply the reduced 5% rate of VAT until the end of September 2021 on certain supplies relating to holidays and hospitality, following on from which the rate will increase to 12.5% until the end of March 2022, after which it will return to the standard 20% rate.

Self-employed entrepreneurs

For self-employed entrepreneurs, it is key to note that self-employment grants will be extended until the end of September 2021.

In respect of income tax, there are to be no changes to the rates of income tax or national insurance. The personal allowance will rise from £12,500 to £12,570 and the higher-rate tax threshold will increase from £50,001 to £50,270, but both thresholds will be frozen thereafter until April 2026.

Please feel free to contact JMW’s corporate team if you’d like to discuss any of the information noted above.

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Lily Barker is a Trainee Solicitor located in Manchesterin our Trainee Solicitors department

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Mark Heppell is a Partner located in Manchester in our Corporate department

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