On Wednesday 3 March Rishi Sunak, Chancellor of the Exchequer, presented his ‘Budget for Recovery’ in the wake of the Covid-19 pandemic. But what does it mean for Peterborough businesses?
Businesses can continue to furlough staff, as the Coronavirus Job Retention Scheme has been extended to the end of September 2021. Both full and flexible furlough are available.
Furlough payment will remain at 80%. In July 2021 employers will need to contribute 10% and in August and September 2021 this contribution will rise to 20%.
No changes to Income Tax, National Insurance, or VAT
There will be no increase to Income Tax, National Insurance or VAT and the thresholds will remain the same this year. In April 2021 tax allowances will be frozen at £12,570 and £50,270 until 2026, in a move to protect household incomes.
Corporation Tax Rates to increase from April 2023 – but only for larger businesses
The rate of Corporation Tax will rise from 19% to 25% from April 2023. A Small Profits Rate will mean that businesses with profits up to £50,000 will keep paying at 19%.
Businesses with profits between £50,000 – £250,000 will be charged at an incremental rate between 19% and 25%.
VAT in Hospitality
The 5% VAT rate for hospitality will be extended and remain in place until 30 September. After this, an interim rate of 12.5% will apply for a further 6 months.
Corporation Tax Losses – Carry Back Relief
Corporation Tax Losses can now be carried back three years (up to a limit £2m). The aim of this move is provide a cashflow boost to businesses impacted by the pandemic.
Super-Deduction – to encourage business investment
To encourage businesses to invest and rebuild their businesses, businesses can now offset 130% of investment costs for the next two years using the super-deduction. More details on this will be published soon.
Freeze on VAT registration threshold and Capital Gains Tax
The UK VAT registration threshold remains one of the highest in Europe and remains at an annual turnover of £85,000.
The annual exemption for Capital Gains Tax also remains frozen – this is good news, as changes were expected. Inheritance tax and pensions lifetime allowances are also frozen until 2025-26.
Coronavirus Business Loans
The Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruptions Loan Scheme (CBILS) will both end on 31 March 2021. A new Recovery Loan Scheme will replace these, enabling businesses to access loan funds of £25k to £10m through to the end of the 2021. You can find out more about this on the Government website.
Restart grants are now on offer for shops and other businesses that were forced to close, totalling £5bn.
Self-Employed Income Support Scheme
The SEISS will be extended to give a fourth grant for February – April 2021 and 5th grant for May 2021 onwards. Those whose turnover has reduced by 30% or more will receive 80%, others will receive 30%.
Newly self-employed people, i.e. those who have submitted a Tax Return for 2019/20, are now eligible.
The business rates holiday implemented for 2020/21 will be extended. From April to June this means 100% holiday for April to June and a 2/3 discount for the last 9 months of the financial year.
Stamp Duty Holiday
The Stamp Duty holiday has been extended until 30 June (was originally 31 March) and there will then be a 0% tax on sales of less than £500,000.
The contactless payment limit will rise to £100 – the date for this has not yet been announced.
How does this impact you?
If you have any queries about what this means for your business, just get in touch. We provide a full range of accountancy services from tax returns, personal tax planning to bookkeeping in Peterborough – so give us a call and we’ll help you make the right decisions for your unique situation.