The budget is hotly anticipated every year by members of the general public and businesses alike. However, understandably, this year more than ever, we were more anxious to see what chancellor Rishi Sunak would announce in order to help the country recover from the COVID pandemic as we head into a recession. Today we are going to breakdown the budget and look at the measures, schemes and initiatives announced to help us recover and to rebuild the economy.
Since the start of the pandemic, as a country, we have borrowed an unprecedented £355bn. Which is the highest amount of borrowing we have ever amassed in peacetime and the highest ever since the Second World War. And for the next financial year, we are forecast to again borrow another £234bn. Which amounts to just over a tenth of our overall GDP. So without further ado, let’s recap what was announced on March 3rd in this year’s budget.
On the hot topic of tax
One of the first statements the chancellor made when it came to taxes is that there wasn’t going to be an increase in income tax, NI or VAT. However, the personal tax allowance threshold had previously been tipped to increase to £12,570. Instead, this has been frozen. With the chancellor advising that it will increase, as promised, next year. Staying at that level until at least April 2026. In the same fashion, the higher rate threshold will also be increased next year until 2026 to £50,270.
Tourism & Hospitality
So far during the pandemic, the tourism and hospitality sector has benefited from a relief in business rates to help them cope with being one of the worst-affected sectors due to the lockdown. And the business rates benefit is to be continued for some 750,000 eligible businesses until the end of June. From then until the rest of the year they will still receive a reduced relief of two-thirds of the rate. The reduced rate of 5% VAT down from 20% will also be extended until the end of September and then at a rate of 12.5% for half a year thereafter before returning back to 20%.
What you need to know about stamp duty
The cut on stamp duty will also continue until the end of June this year. The nil band rate is set to stand and remain at £250,000 also until the end of September, double what it is usually. We are also seeing the introduction of a mortgage guarantee scheme that we will cover in a lot more depth in one of our later blogs where we dissect the budget in more detail. It is being introduced to help potential homeowners get a mortgage with a lower deposit than is currently required (5% deposit for a mortgage up to £60,000.
News regarding jobs
Another new scheme that is being introduced to boost the economy into recovery is a restart grant. This is a grant of £6,000 available per premises to those businesses based in retail. They are also doubling the incentive for businesses to take on apprentices. Previously £1,500, businesses will now get up to £3,000 per apprentice hired between the 1st April and 30th September 2021. A further grant has also been announced for those who are self-employed. Which will cover the period of February to April up to 80% of an average trading profit of up to £7,500. They have also announced a further fifth grant will be available from July.
The chancellor has also announced that they will be investing an extra £1.65bn to ensure that the vaccine rollout across England keeps up and increases its pace and continues to be a success. With a further £28m going towards ensuring that the capacity for testing here in the UK can be expanded as well as funding both for clinical trials and towards the nation’s ability to acquire samples of new variants for testing/analysis. The £500 test and trace support payments for those who abide by the request to isolate will also be extended until this summer.
Working Tax Credits Lump Sum
Alongside the increase in Universal Credit that was announced the Chancellor also announced a one-off payment for households in the UK that are in receipt of Tax Credits to the tune of £500. Those who were in receipt of working tax credits on the 2nd March of this year will be eligible to receive the one-off payment which is expected to start being rolled out from April 12th of this year. If you are eligible for this payment you will be contacted by HMRC either by text message or by letter.
The Recovery Loan Scheme
The government have replaced existing schemes that were coming to their respective ends in March 2021 with a Recovery Loan Scheme. Eligible businesses will be able to apply for loans anywhere from £25,000 all the way up to £10m. The government is also encouraging lenders to provide these loans by giving them an 80% guarantee. The scheme is scheduled by the government to start on the 6th of April and run to the end of the year. If you are a business that wants to apply for one of these loans you’ll need to apply through one of the government’s approved lenders.
The Community Ownership Fund
The pandemic has hit a lot of local communities hard; such as football clubs and small local businesses. In response to this, another scheme that was introduced is something called the community ownership scheme. This allows local communities to buy/take over the assets of local businesses in order to keep them afloat. Similar to the type of structure that is currently in place in certain football clubs where the supporters have either partial or usually majority ownership of the club. The government will provide up to £250,000 to these communities to support them in the funding of these businesses.
Are you affected?
If you want to know more about how the budget has affected your business. Or if you want to know more about specific schemes that have been announced in the budget this year that could help boost your business why not get in touch with a member of our team. Here at D&K Accounting, we are specialised profit first professionals who help businesses across the UK manage their books better and grow their business.