Budget 2021 – Road to Recovery

This year like in other years the UK budget contains a mixture of taxation and non-taxation announcements.  The non-taxation announcements are equally as important, if not more so this year as we look to recover from the COVID-19 pandemic.

Detailed below are a summary of some of these:

• Recovery Loan Scheme – This new loan scheme opens to all businesses from 6 April 2021 and will provide lenders with a Government guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses.

• Coronavirus Job Retention Scheme – will continue to reimburse employers with the salaries of furloughed employees until 30 September 2021. The employee should receive at least 80% of normal pay for hours not worked. Until 30 June, the employer will only be required to contribute employer’s National Insurance Contributions and pension contributions (as at present); in July, the employer will have to contribute 1/8 of the remaining cost (i.e. 10% of normal salary), rising to 1/4 (20% of normal salary) in August and September.

• Self-Employed Income Support Scheme (SEISS) – There have so far been three grants under the SEISS, each covering three months. A fourth grant, covering February to April 2021, will be claimable from late April at 80% of three months’ average profits capped at £7,500 in total. Claimants must have filed a 2019/20 tax return to be eligible for this grant. People who began self-employment in 2019/20, who did not have a record of earnings, could not claim the first three grants, but may be able to claim the fourth grant if they have filed a 2019/20 return by midnight on 2 March 2021.  A fifth grant, covering the period from May to September 2021, can be claimed from late July. This will be targeted at those who need it most as the economy reopens. Those whose turnover has fallen by 30% or more will be eligible for the full grant, which will be 80% of three months’ average profits capped at £7,500. The fact that the grant covers a five-month period appears to allow for the likelihood that the business will be reopening in that time. Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.

• Restart Grants – As businesses reopen after the present lockdown, non-essential retail businesses in England can claim up to £6,000 per premises; hospitality, accommodation, leisure, personal care, and gym businesses can claim up to £18,000 per premises. The Government is also providing £425 million to local authorities to use for discretionary grants to businesses. It is hoped the Scottish Government will provide similar support.

• Business Rates – Eligible retail, hospitality, leisure, and aviation businesses in Scotland will pay no rates during 2021/22, as announced previously by the Scottish Government.

• Freeports – The Budget outlines the introduction of ‘Freeports’, areas in which a number of tax and other incentives will operate to encourage trade. Eight areas in England have been announced, with discussions in progress to extend the concept in the other nations of the United Kingdom.

• Mortgage Guarantee Scheme – A new mortgage guarantee scheme has been announced to enable homebuyers to secure a mortgage of up to £600,000 with a 5% deposit.

• Support for the Arts, Culture, and Sporting Institutions – A £700 million fund has been put in place to support the sector.

• Green Bonds – The UK will issue at least £15 billion in green bonds to help finance the transition to net zero and the government will launch the world’s first sovereign green savings bond for retail investors.

We can offer support and advice for your business on any matter arising from the Budget. To discuss your circumstances or for more information on any of the announcements above, please get in touch with us by calling one of our offices.