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Overview of Budget 2021 for Businesses

The Chancellor, Rishi Sunak, has delivered his budget under a three part plan:

1. Protecting jobs and livelihoods

2. Fixing public finances

3. Building our future economy

Under these themes are the key impacts for businesses in terms of COVID support (furlough, support to businesses, VAT rates, loans, freezing of duties). Additionally, as part of the plans for the future, the Chancellor announced changes to Corporation Tax, investment tax benefits, and a Help to Grow training scheme.

1. Protecting jobs and livelihoods

  • Furlough scheme extended to 30th September 2021 – With Government support remaining at 80%
  • Employers will need to make contributions from July 2021. A 10% employer contribution in July and a 20% employer contribution in August and September
  • The ability for businesses to recover 2 weeks SSP will continue
  • Other than the above other terms of the furlough scheme remain unchanged
Other employment related changes
  • The minimum wage will increase to £8.91 from April 2021
  • The incentive for apprentice hires will be doubled to £3,000 
Business loans
  • With the CBILS and BBL schemes ending on 31st March 2021, there will be a new Recovery Loan Scheme which will be available until 31st December 2021. This will make available loans of between £25,001 to £10m. Also, asset and invoice finance will be made available for between £1,000 to £10m
Other COVID related business support
  • New restart grants will be available from April to support businesses re-opening. Up to £6,000 available for non-essential retail. Up to £18,000 for hospitality, gyms and personal care businesses
  • Business rates holiday will continue at 100% for 3 months to 30th June 2021. This will be reduced to 66% until 30th September 2021
  • The reduced rate of VAT for hospitality and tourism related services of 5% will continue until 30th September 2021. This will be increased to an interim rate of 12.5% until 31st March 2022

2. Fixing public finance

Under this theme the tax thresholds will be frozen until 2026:

  • Personal tax threshold will increase next year to £12,570 and will then be frozen until 2026
  • Higher tax threshold will increase next year to £50,270 and will then be frozen until 2026
Business taxation
  • Corporation Tax will increase to 25% in April 2023
  • There will be a small business profit tax rate of 19% for businesses with profits of £50,000 or less
  • There will be a tapering of Corporation Tax with the 25% tax rate applying to companies with profits of greater than £250,000
  • Additional relief for tax losses will be available
  • There will be a temporary extension to the carry back of trading losses, to a maximum of £2m, from 1 year to 3 years – for incorporated and unincorporated businesses
  • There will now be a cap of £20,000 on the amount of R&D tax credit received in any one year, plus three times the company’s total PAYE and NIC
  • A ‘super-deduction’ will be available for businesses investing in new equipment. The ‘super-deduction’ will allow a 130% tax allowance for eligible investment spend
  • Duties on alcohol and petrol will be frozen

3. Building our future economy

To support improving productivity the Chancellor announced a Help to Grow scheme which will provide access to training and support from Autumn 2021.

  • Help to Grow Management – access to management training with 90% government contribution to the training
  • Help to Grow Digital – businesses will be able to access free training with up to 50% discount on productivity software

In addition to the above, there were announcements of significant investment in the future economy in the form of:

  • Freeports
  • Future Fund Breakthrough
  • Investments in green investment
  • Review of R&D tax relief
  • Immigration reform to attract high skills talent