Spring Budget Breakdown

Chancellor Rishi Sunak’s second budget included details of further support for businesses as they manage their way out of lockdown in 2021. Not only that, support will be extended well beyond the roadmap. This was highlighted in a three-part plan:

• Support people and businesses
• Take time to fix public finances
• Begin building the future economy

In this article we’ll look at the areas of the budget that are likely to affect you and your business and break them down.

The spring budget 2021

Furlough scheme extended

The Job Retention (furlough) Scheme was originally established in March 2020, It’s purpose was to assist organisations with retaining staff during the coronavirus pandemic. Since then, it has been extended numerous times. Now, with plans to reopen businesses over the next few months, the scheme is to be extended again, this time until 30 September 2021.

As before, furloughed workers will still get 80%of their wages for the time in which they do not work, subject to a monthly maximum. However, from July, the government will start reducing their contribution to the scheme.

From July 2021, the government will contribute 70% of wages for unworked hours. You will have to provide the remaining 10%.

In August and September 2021, they will contribute 60%, meaning organisations must provide 20%.

Assuming everything goes to plan, the furlough scheme will remain an option even after lockdown restrictions are lifted on 21 June. This may occur sooner in Scotland and Wales but has yet to be confirmed.

Further support for businesses and people

An extra £1.65 billion will ensure that the COVID-19 vaccination roll-out in England continues to be a success, Mr Sunak said.

Further grants for the self-employed will be targeted at those most affected. Those suffering more than a 30% drop in profits will get the full grant, others will get a percentage. The newly self-employed were previously excluded. However, if they have filed a tax return by 2 March 2021, they can now claim.

Extending support to the lowest paid, the extra £20 per week paid to Universal Credit claimants will continue for another six months. Furthermore, the National Living Wage (NLW) will rise to £8.91 from April. There will be a one-off payment of £500 to eligible Working Tax Credit claimants across the UK.

A new restart grant will be available in April to help the businesses re-opening first with grants of £6000. The later ones, such as gyms, will get £18,000.

In addition, £700 million will be made available to help the creative sector to re-start.

Bounce Back Loans are ending. However, a new Recovery Loan scheme will offer sums of between £25,000 and £10 million backed by an 80% Government guarantee.

Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.

Rates & Tax

The 100% business rate holiday will continue through until June. This includes a two-third discount for rest of the year. The 5% reduced rate of VAT for hospitality, accommodation and attractions across the UK will be extended to the end of September. This will only return to normal levels in stages, starting with 12.5% until 31 March 2022.

Pay back

The £65 billion being provided by this Budget puts the total COVID support package at over £400 billion. The Chancellor emphasised that the State should not be borrowing to pay for everyday spending. It cannot let debt rise indefinitely, he went on, but it can use low interest rates to invest in capital projects.

Two new measures will, Mr Sunak said, “ask more from those who have most”:

• Personal tax thresholds will be frozen after the next rise and maintained at that rate until 2026 as will the VAT threshold.
• In 2023, the rate of Corporation Tax paid on profits will go up to 25%. Small businesses with profits below £50,000 will stay at the 19% rate and only 10% of firms will pay the full rate.

On the other hand, he offered businesses two new concessions.

• With regard to the tax treatment of losses, they can now carry back up to £2 million for three years (worth up to £760,000 per company); and
• To unlock investment, he is introducing a “super deduction” for future investment. This will enable firms to reduce their tax bill by 130% of the cost of their investment. This is worth around £25 billion to UK companies over the two-year period the scheme will be in full effect.

Duties

Planned increases in duty on spirits, wine, beer and fuel duty are all cancelled.

Training and Recruitment

Two new training schemes will help small businesses to become more productive.

They are:

• Help to Grow Management – offering world class management training with mentoring and with the Government covering 90% of the cost; and
• Help to Grow Digital – offering small firms free training and 50% discount on software.

Enrolment for both will be open in the near future.

Employers taking on new apprentices of any age will see the incentive payment double to £3000.

£7 million will be made available for a new “flexi-job” apprenticeship programme in England. This will enable apprentices to work with a number of employers in one sector.

Finally, the Home Office will be announcing ambitious visa reforms to allow the best talent in science, technology and innovation to come from around the world to work in the UK. Details of these reforms are still pending.

Expert support

If you’re concerned about any of the issues raised in the budget, or want support moving forward, speak to one of our expert HR or health & safety consultants today on 01455 858 132.