2021 budget announcements

16 April 2021

5 min read

The 2021 Spring budget has outlined the Chancellor, Rishi Sunak’s ‘three part plan’ towards economic recovery – supporting those sectors and businesses impacted most by the pandemic, paying for the financial response, and investing in the future economy.

Here’s a summary of what you need to know:

Recovery Loans Scheme

The CLBILS, CBILS and Bounce Back Loans Schemes closed to new applications on 31 March 2021. In their place is a new recovery loan scheme where businesses of all sizes will be able to borrow between £25,000 and £10m. Applications will be open through to the end of 2021 and the Government will provide a guarantee to lenders of 80% for the amount borrowed.

Furlough extension and Statutory Sick Pay

The Chancellor confirmed an extension to the furlough scheme to 30 September 2021. If you employ people that you’ve furloughed, note that the support will be tapered. So, you’ll need to contribute 10% towards hours staff don’t work in July, increasing to 20% in August and September.

SMEs 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.

Business rates

In England, the 100% business rates holiday will continue through to the end of June 2021. For the remaining nine months of the financial year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses.

In Scotland, a business rates holiday for retail, hospitality, leisure, and aviation sectors in 2021-22 had already been announced. Wales has also confirmed a business rates holiday for the full 12 months for retail, hospitality and leisure businesses. The VAT cut to 5% for hospitality and tourism sectors will also remain until September. After that, it’ll increase to 12.5%, before returning to 20% in April 2022.

Restart Grants

The Government has announced a £5 billion grant scheme for England to help high street businesses reopen after lockdown. Around 700,000 businesses will be eligible for the grant, including shops, salons, gyms, and restaurants.

With non-essential retail being able to open earlier, grants to those businesses will be worth up to £6,000. Within the hospitality sector, individual businesses could receive as much as £18,000.

Self-employment Income Support Scheme (SEISS)

The Self-employment Income Support Scheme (SEISS) has been extended for a fifth grant, covering June, July and August. However the fifth grant will be more targeted to:

  • those whose turnover has fallen more than 30% will still be eligible for 80% of average monthly profits (up to £7,500)
  • those who haven’t been as affected will be eligible for a grant worth 30% of average monthly profits

Business Investment

A new ‘super’ tax deduction for companies investing in plant and machinery, which will cut companies’ tax bill by 25p for every pound they invest in new equipment – taxable profits can be reduced by 130% of the cost.

Help to Grow scheme

The Chancellor announced the new ‘Help to Grow’ scheme, designed to boost productivity, efficiency, and digital skills. UK businesses can access a 12-week online management programme from June, with 30,000 places available over three years. The government covers most of the cost – businesses will need to pay £750. You need to have between 5 and 249 employees and have been operating for more than a year.

In the Autumn, discounts on productivity software will be launched to aid digital growth and presence. The Government says the help to grow plan is open to 130,000 small businesses.

Learn more about the Help to Grow campaign.

Personal income tax

Personal income tax thresholds will be frozen until 2026 at £12,570 for the basic rate and at £50,270 for the higher rate. This means, people will pay more tax as their incomes increase.

Corporation tax

The rate of corporation tax paid on company profits will increase to 25% – but with some key caveats:

  • the new rate won’t be introduced until April 2023
  • small businesses with profits of £50,000 or less will continue to pay the current 19% rate
  • the rate will then be tapered up, depending on business profits – only businesses with profits of more than £250,000 will pay 25%. The Chancellor said that this means only 10% of all companies will pay the 25% rate.

Mortgages and Stamp duty

The Chancellor has offered a mortgage guarantee scheme under which first time buyers can obtain a mortgage with a 5% deposit. The Government will partially underwrite the remaining 95%.

The stamp duty holiday has been extended by three months to 30 June 2021.

Duties

Duties on alcohol and fuel have been frozen and future planned increases have been cancelled.

Community buy out for pubs

If a business owns a venue that’s at risk of shutting down, or are interested in saving a venue in the community, the Government has announced a £150 million pot to help local communities save it from closure. This is a four year nationwide scheme that allows communities to bid up to £250,000 to save a nearby pub or social club. The Government will match the money raised.

Further information on the budget announcements can be found here: