Updates, New Budget 2021
UK Budget 2021-2022 and what does it mean to us?
• Get paid for hiring trainees and apprentices - From 1 April 2021, companies can get a £3,000 cash incentive for each apprentice they hire – and there’s no age limit. Under the current scheme, apprentices need to be under the age of 25 for companies to receive £2,000 per hire.
• Self-employment Income Support Scheme (SEISS) extension - For many of the self-employed, the government's Self-employment Income Support Scheme has been a lifeline during the coronavirus pandemic. This has been extended with a fourth grant from April, and a final fifth grant from May onwards, helping to compensate the self-employed for lost earnings.
• Super deduction' tax relief for business investments - businesses are being encouraged to invest in infrastructure to support the country’s economic recovery with a new ‘super deduction’ tax relief. Beginning in April 2021, this deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This could mean they can reduce their taxable profits by 130% of the cost. This is thought to be good news for manufacturing and construction firms as investments are likely to be brought forward with these tax cuts. Mr Sunak said: “We need an investment-led recovery.” He gave an example that, under existing rules, a construction firm buying £10m of new equipment could reduce its taxable income for the year by £2.6m, but with the "super-deduction", the company could reduce it by £13m.
• Furlough extended until September - The furlough scheme, previously due to end on 30 April, will now continue until the end of September. Anyone on furlough during that time will continue to receive 80% of their salary from the government, capped at £2,500 a month. However, employers will have to contribute 10% from July and 20% in August and September towards the hours their staff are not working.
• Stamp duty holiday extended until June. Stamp duty holiday extension and first-time buyer mortgage boost After much campaigning from the housing sector, the Chancellor has extended the temporary stamp duty holiday beyond its original 31 March deadline. It will now last until 30 June in its current form, which offers 0% stamp duty on the first £500,000 of property purchases. The threshold will then be reduced to £250,000 for the three months from 1 July to 30 September, and rates will return to normal from October. Mr Sunak also confirmed plans for the government to guarantee 95% loan-to-value mortgages, which could help first-time buyers get on the property ladder. As we’ve reported previously, lenders have been withdrawing low-deposit mortgages for months now, making it harder for people to buy their first homes. To address this, Mr Sunak announced that the government will underwrite 95% mortgages on properties worth up to £600,000. Several major banks are said to be on board, and the deals should be available from April.
• The tax personal allowance will rise from £12,500 to £12,570 next year. Then it will stay at that rate for five years. Similarly, the threshold at which you would pay the higher tax rate will rise from £50,000 to £50,270, where it will also be frozen.
• Universal credit boost extended The £20-a-week universal credit uplift will be extended for another six months, after much campaigning for it to be extended or made permanent to avoid plunging families into poverty.
• Pensions lifetime allowance freeze. In another measure to raise funds for the Treasury, the total amount you can save into a private pension without being taxed will be frozen at £1,073,100 until April 2026.
• Corporation tax will rise… eventually. To help balance out the government’s huge spending on coronavirus support, the Chancellor confirmed a much-rumoured corporation tax rise, bringing the rate from its historic low of 19% up to 25%. This would still mean the UK has the lowest corporation tax rate of the G7 nations. The rise will only come into effect from 2023, and the Chancellor says just 10% of companies will have to pay this higher rate. This is because businesses with profits under £50,000 will still pay 19%.
• Support for businesses. High street shops and hospitality businesses will be able to get ‘restart’ grants when they reopen later this year.
• Minimum wage increase confirmed. The National Minimum Wage and National Living Wage will increase for the 2021-22 tax year. It will change as follows: Age group 2020-21 minimum hourly wage:
23 and over £8.72 to £8.91
21 to 23 £8.20 £8.36
18 to 20 £6.45 £6.56
16 to 17 £4.55 £4.62
Apprentices £4.15 £4.30
• Contactless payment limit will rise to £100.
This will be the second rise in recent years, after the limit increased from £30 to £45 in 2020. It’s the biggest increase in contactless payment limits so far, more than double its previous level. Legally, the limit rise is in effect from today, but you won’t be able to tap and pay £100 until firms have implemented the change later in the year.
Source: Read more: https://www.which.co.uk/news/2021/03/budget-2021-what-you-need-to-know/ - Which?