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The Budget pledges continued help for businesses and families. Firstly, it addresses financial difficulties brought about by the pandemic. Then again, there’s the need to balance the nation’s books. It seems the latter can wait. Essentially, the Chancellor concentrated on Budget support to combat the impact of coronavirus.

 

Coronavirus Job Retention Scheme

Sadly, unemployment is forecast to rise to 6.5% this year. Yet many jobs have been saved thanks to furlough. Consequently, the scheme will now run until 30 September 2021. The Government will continue to reimburse employers. Salaried employees will still receive at least 80% of normal pay for hours not worked. Until 30 June, employers contribute to employer’s National Insurance Contributions and pension contributions only. In July they must pay 10% of usual salary. This contribution rises to 20% in August and September.

 

Additional SEISS grants

There’s good news for the self-employed. Budget support to combat the impact of coronavirus continues until September. A fourth grant covers February to April 2021. It’s worth 80% of three months’ average profits, capped at £7,500. Eligible workers must have filed a 2019/20 tax return. They can claim the grant from late April.

 

A fifth grant is available from late July. Covering May-September 2021, it targets those in most need. There are two levels. Workers whose turnover is down 30% or more get the full grant.  This is 80% of three months’ average profits. It’s capped at £7,500. It’s different if turnover drops by less than 30%. In this instance claimants receive a 30% grant. This one is capped at £2,850.

 

Remember, SEISS grants are classed as taxable income. Grants are taxed in the financial year you receive them.

 

More self-employed people benefit

Many self-employed workers struggle to access support. To address this problem, the Chancellor has amended the rules. As a result, another 600,000 people could benefit. Did you become self-employed in 2019/20? If so, this could affect you. You may be able to claim the latest SEISS grants. To qualify, you must have filed a 2019/20 return by midnight on 2 March 2021.

 

Universal Credit lifeline

For many families Universal Credit makes a huge difference. Indeed, the £20 per week uplift is often a lifeline. Thanks to Budget support to combat the impact of coronavirus, the increase remains until 30 September 2021. Extra support is available to anyone claiming Working Tax Credit. This takes the form of a one-off payment of £500. It provides equivalent support over the next six months.

 

5% VAT rate

Hospitality, leisure and entertainment were hit hard by Covid-19. The Government is helping businesses get back on their feet. Last July these sectors saw a VAT cut. The 5% rate was to finish on 31 March 2021. Following the Budget, it remains until 30 September 2021. Between 1 October 2021 and 31 March 2022 the rate is 12.5%. Thereafter, the standard 20% rate resumes.

 

Recovery Loan Scheme

Some Government-backed loan schemes end on 31 March 2021. Happily, continued support is available through the Recovery Loan Scheme. The Government is keen that lenders provide finance to businesses. Therefore, it will guarantee 80% of eligible loans between £25,000 and £10million. All businesses are eligible. Apply for a Recovery Loan from 6 April 2021.

 

New Restart Grants

Budget support to combat the impact of coronavirus includes Restart Grants. These aim to help businesses reopen after the current lockdown. Non-essential retail can claim up to £6,000 per premises. Larger grants are on offer to hospitality, leisure, personal care and gym businesses. They can claim up to £18,000 per premises. In addition, local authorities can access £425million of Government funding. This is being made available for discretionary grants.

 

Business rates relief extended

Last year retail, hospitality and leisure businesses in England enjoyed a business rates holiday. The 100% business rates relief is being extended. It now runs until 30 June 2021. What’s more, a further 66% relief is available for the period to 31 March 2022. For properties forced to close on 5 January 2021 this is capped at £2 million per business. For other eligible properties it’s £105,000 per business.

 

Enterprise Management Incentives

EMI scheme participants must commit at least 25 hours per week. Alternatively, they can allocate 75% of total working time. The pandemic created a problem. Workers on reduced hours or furlough would break this condition. Budget support to combat the impact of coronavirus addresses this. The solution? Relax the rules between 19 March 2020 and 5 April 2022. Participants don’t have to exercise their options earlier than planned. Plus, they benefit from qualifying options during the pandemic.

 

Carry back of losses

Typically, companies and unincorporated businesses can set trading losses against profits in the current or previous 12-month period. Alternatively, they can carry them forward against future profits. What if a business makes large losses due to coronavirus? Or, what if losses occur in two successive periods? Carrying back a year may not relieve the whole amount. To resolve this, the Budget extends the carry-back to three years for trading losses of 2020/21 and 2021/22.

 

‘Super-deduction’ for plant and machinery

The Government is keen for businesses to invest. A new measure promotes investment in new plant and machinery. So, a 130% super-deduction capital allowance applies on qualifying assets. There’s also a 50% first-year allowance for qualifying special rate assets. The upshot? Companies reduce their tax bill by up to 25p for every £1 invested.

 

Paying deferred VAT

Last year, many businesses decided to defer VAT. Initially, VAT due March-June 2020 had to be paid in full by 31 March 2021. Thanks to Budget support to combat the impact of coronavirus, businesses have more time. You can apply to pay by interest-free instalments. VAT must be paid by 31 March 2022. Apply online by 21 June 2021. Apply early to spread payments over a longer period.

 

Howards Spring Budget Report

Full details about Budget support to combat the impact of coronavirus are in our Spring Budget 2021 report.

Download the full PDF report here.

 

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