The UK Budget 2021: All you need to know

Beginning in April 2021 there are a number of changes to the UK budget. This budget has been long awaited as the Chancellor Rishi Sunak responds to the economic effects of the COVID-19 outbreak. Below, we outline the key points for this years Budget so you are prepared for any financial or tax related changes that could affect your business or practice as a sole-trader.

Furlough Scheme

• Furlough has been extended till end of September 2021

• The government are to continue paying furlough up to 80%, until June

• If you are employed, your employer will be asked to contribute 10% in July and then up to 20% in August and September

Self Employed Income Support Scheme

• The self employment income support has been extended until September 2021

• If you couldn’t previously claim for the grant, you can now claim so long as you have filed your personal tax return for the tax year 2019-2020 (due 28th Feb 21). Great news for those newly self-employed!

• Those eligible for the fourth grant will be invited to apply at the end of April 2021

Newly self employed? Read our checklist of what you need to do to get set up as self employed here

Universal Credit / Working Tax Credit

• £20 increase in Universal Credit to continue for another 6 months

• Working Tax Credit claimants will receive a one-off payment of £500. If you are eligible, you will be contacted

• Minimum Wage increased to £8.91 an hour from April 2021

Taxation

• Income Tax, Vat and National Insurance – nothing changes

• Stamp Duty holiday on house purchases extended till June 2021, no tax liability on sales of less than £500k

• Inheritance Tax – No changes

• Corporation Tax – Higher rate to be introduced on company profits from 19% to 25%

  • Rate to be kept at 19% for smaller companies with profits less than £50k

• Personal Income Tax – Allowance to be frozen at £12,570 from April 2022-2026

• Higher Rate Income Tax – Allowance to be frozen at £50,270 from 2022 – 2026

Businesses

• Businesses will be able to deduct investment costs from tax bills, reducing taxable profits by 130%

• Companies that take on an apprentice – grants to rise to £3000

• Vat rate to stay at 5% for hospitality firms till September 2021

  • Vat rate to be 12.5% after September for another 6 months till April 2022

• Tax on spirits – No increase for a second year running

• Tax on fuel – no increase for a second year running

• Business rate holidays to continue till June 2021, after which point a 75% discount will be introduced

• Restart grants for shops and businesses that were forced to close

  • £6,000 per premises for non-essentials that will re-open in April (as per the roadmap)

  • £18,000 for Gyms, Personal Care businesses and other hospitality and leisure businesses

• New VISA scheme to help start-up companies and grow tech firms

• Contactless payments to rise to £100

Loans

Following the end of the BBLS and CBILS loan scheme, the government will now launch a Recovery Loan Scheme

• Any business can apply

• You can borrow from £25,000 – £10,000,000

• The government will guarantee the new loan scheme 80%

Mortgages

The government will launch 95% mortgages to help first time buys get themselves on the property ladder, with a host of lenders already starting to offer this product following on from the budget and a lot more to follow.

 

Download our free PDF infographic about the changes here: Budget 2021 Infographic

Feel free to share this with self-employed, businesses small or large.

Our team of accountants are well versed on any changes in business taxes that might adversely affect your finances or business. We are always at the end of the phone if you have any accountancy or bookkeeping questions.

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