Chancellor Rishi Sunak has proposed the below changes in this year’s Budget in the House of Commons today.
Private sector Off-Payroll Changes (IR35)
The changes will go ahead from 6th April 2021, with no further postponement.
No change for Capital Gains and IHT
No changes to Capital Gains tax regime. This does mean no changes to Entrepreneur relief(Business Asset relief). Capital Gains Exempt Amount of £12,300 will remain.
IHT (Inheritance Tax) exempt amount unchanged at £325,000
No COVID support for Limited Company Directors
Chancellor continues to ignore Limited company Directors. The Treasury Committee Chair and Conservative MP Mel Stride’s chair said his Disappointed there was no mention of help for one group of the self-employed – “directors paying themselves through dividends yet not having those dividends counting towards furlough”.
Furlough Scheme/CJRS Extended
The furlough job support scheme will continue until the end of September as per the Chancellor.
After July, the business will be requested for a 10% contribution which will rise to 20% in August and September.
Self-Employed Income Support Scheme (SEISS)
SEIS is extended till September 2021. The newly self-employed will be able to claim the fourth and fifth grants, provided a tax return was filed by 28 Feb 2021. Limited Company Directors does NOT fall under this scheme.
Personal Tax allowance to go up and be frozen
Personal Allowance will continue to go up to £12,570 as planned and will remain at this level until 2026. The higher rate threshold is to be increased to £50,270 and will remain at this level until 2026 as well.
National Minimum Wage increased.
The National Minimum Wage increases to £8.91 from April 2021.
Stamp Duty Holiday Extension
The current stamp duty holiday was supposed to end on the 31st of March 2021. However, the Chancellor has proposed an extension up to June 2021. To support the transition, purchases will be free from tax up to £250,000 until September 2021. From 1st October 2021, the nil rate band for stamp duty will return to £125,000.
The Mortgage Guarantee scheme will be introduced to support the Prime Minister’s view of Generation Rent into Generation Buy. Chancellor Rishi stated that several mortgage lenders such as NatWest, HSBC, Lloyds, and Santander banks will be introducing 95% Mortgages from April. Also, more lenders such as Virgin Money will be following up the lead as well.
Rise in Corporation Tax
The corporate tax rate on company profits will be increased to 25% in 2023. Chancellor stated that even with the increase of tax, UK will remain as the lowest corporate tax rate in G7. He added that small businesses with profits of £50,000 or less will be charged at the current rate of 19%.
Below will be new Corporation tax rates from 2023
Upto £50,000 – 19%
£50,001-£100,000 – 20%
£100,001 -£150,000 – 21%
£150,001 – £200,000 – 22%
£200,001 – £250,000 – 23%
Above £250,001 – 25%
VAT for the Hospitality and Tourism industries
5% reduced VAT rate extended to 30 September 2021, followed by a 12.5% interim rate until April 2021.
VAT registration threshold remains at £85,000 until 2021.
New business re-start grants
To help businesses open, a new re-start grant will be provided in April.
· Up to £6k for retail and non-essential business
· Hospitality business will receive grants of up to £25k
· £700m for organisations such as sports and arts.
New Super deduction for companies
130% reduction for expenditure for companies investing in qualifying new plant and machinery assets.
Help to grow
A new initiative for small businesses. Two main initiatives are,
Help to Grow: Business education with up to 90% of the cost to be paid by the government.
Help to Grow Digital: offering free expert IT training and a 50% discount on business software up to £5,000.
You can register your interest here.
Alcohol and fuel duties are frozen.
Pensions allowances unchanged £40,000 p.a and no change to the lifetime limit.
Goods that arrive into freeports from abroad are not subject to tariffs. Eight Freeport’s in East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside will be opened.
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