Here are the Key Points from the Governments Budget delivered on the 3rd March 2021 that effect business owners and property investors.
Overall this was a spend now and tax later budget. The government is spending £65 billion pounds over the next 2 years to soften the Covid-19 blow on businesses. Then will claw back £25 billion pounds per year by increasing taxes.
Business Rates
Rishi Sunak confirms that the business rates holiday will be extended through to the end of June 2021.
VAT
The current 5% reduced rate of VAT for the hospitality and catering sector will be extended for six months to 30 September 2021 followed by interim rate of 12.5% for another six months. The standard rate will not return until April next year.
The VAT registration threshold will remain at £85,000 until 2024.
Property
The nil-rate band for Stamp Duty of up to £500,000 will be extended to June 2021, instead of the end of March 2021. Then for a further 3 months, the first £250,000 will not be taxed. Mitul Pandya commented that "This is a phased approach from the government to ensure that there is lower cliff edge fall in property transactions. Some transactions will inevitably not complete on time. There will be a lot of pressure on conveyancers and lenders to complete before July".
First-time buyers can receive a new "Government Guarantee" on mortgages, with a deposit of 5%. Many big lenders are already backing the scheme.
Tax Rates for Individuals
The personal allowance to increase to £12,570 from 6th April. The higher rate threshold will be £50,270. These thresholds will be frozen until 2026. Mitul Pandya commented "This is a stealth tax rise. By freezing the personal allowance and the tax thresholds, will generate more tax revenues with people not seeing their actual take-home pay reduce."
Corporation Tax
In 2023 the government will raise corporation tax to 25%.
Rishi Sunak will be creating a Small Profits Rate to ensure only businesses with profits of over £250,000 will be taxed at the 25% rate.
The Current 19% rate will be maintained for small companies with profits up to £50,000. Then there will be a gradual increase in the effective corporation tax rate for profits between £50,000 and £250,000.
Loss relief has been extended to be able to carry back up to 3 years.
Capital Investment
To encourage companies to invest in new plant and machinery, they will benefit from a tax deduction of either 50% or 130% for additions from 1st April 2021 to 31st March 2023.
The 130% rate is expected to apply to the majority of qualifying new assets. Called the Super-Deduction, this will apply to items such as office furniture. Cars are excluded.
Furlough Scheme
The furlough scheme - which pays 80% of employees' wages - will be extended until the end of September. Employers will be asked to contribute 10% in July and 20% in August and September.
New Help To Grow Schemes
The chancellor will announce a new set of UK schemes called "help to grow".
This will include projects to support people get management training and train small business in digital skills.
Eight New Freeports
To help boost business post-Brexit, these eight new freeports are areas that allow businesses importing and exporting from the UK to operate under simplified customs, tax and planning rules. This should increase local investment and employment in these 8 locations.
If you would like to know more about how the budget effects your business, please contact your team member directly or email enquiries@Charterwells.co.uk.