March 2021 Budget
Photo source: www.independent.co.uk, March 2021
After the Chancellor’s budget speech yesterday (Wednesday 3 March), there are a couple of areas I wanted to highlight.
CJRS / Furlough Scheme
As you will no doubt have heard, the scheme has now been extended until 30th September 2021.
There are two areas which were not quite so widely reported, which are:
1. Tapered Grant level
Up to the end of June 21 – the Government will continue to pay 80% of usual wages for the hours not worked, up to a cap of £2,500 per month.
In July 21, grants will cover 70% of usual wages for hours not worked, up to a cap of £2,187.50
In August and September, the grant will cover 60% of employees, up to a cap of £1,875.00
Employees must continue to be paid at least 80% of their wages – so from 1st July onwards, employers will need to fund the difference between the CJRS grant and 80% of wages.
In addition, employers will continue to be liable for Employers National Insurance and Employer pension contributions.
2. Extended Eligibility criteria
Another update which wasn’t widely publicised yesterday is that there is an update to CJRS eligibility from May 2021.
From pay periods starting 1st May onwards, employers will be able to claim for employees who were on payrolls on 2nd March 2021. This means that they must have been reported with earnings on an RTI / FPS submission between 20th March 2020 and 2nd March 2021.
This opens up the scheme who may now wish to furlough employees who started since October 2020. Employers do not need to have used the scheme before in order to make a claim.
Corporation Tax
As you will have seen – Corporation Tax is set to rise to 25% from April 2023. However, a new small profits rate has been introduced – with businesses earning less than £50,000 profit will continue to pay at 19%.
For businesses earning between £50,000 profit and £250,000 will be taxed on a tapered rate rising from 19% to 25% .
VAT Rate for Hospitality Businesses
The reduced rate of VAT to 5% for hospitality businesses has also been extended to 30th September – and thereafter will be at 12.5% from October until April 2022.
This is good news for hospitality clients who will be able to benefit from reduced VAT liabilities as their business hopefully start to re-open.
Recovery Loan schemes
The Business Bounce Back Loan and CBILs schemes are now closed for new applications – and a replacement facility has now been announced.
Loans and overdrafts between £25,001 and £10 million per business may be available – with additional facilities for invoice financing and asset finance.
The government will guarantee 80% of the finance to the lender – and no personal guarantees will be taken on lending up to £250,000.
Businesses who have borrowed under the existing loan schemes would still be eligible to apply for the Recovery loan scheme – which will launch in April.
Income Tax
The new personal allowance will rise to £12,570 from the new tax year in April 2021 – and will stay there until April 2026.
The higher rate threshold will rise to £50,270 from April 2021 and again, will stay there until April 2026.
The NI primary / lower profits level rises in 2021/22 to £9,568 and again, will be frozen until April 2026.
The Accountability Edinburgh team are here to help so please get in touch with any questions you have after the budget announcements.