Everything You Need to Know About Budget 2021
17th March 2021
On 3rd March Chancellor Rishi Sunak presented his second Budget. The Chancellor provided updates on the Coronavirus support available to business, new management and digital support for SMEs, set out his plans to increase Corporation Tax and unveiled measures to support business investment.
Following the announcement IFB’s Fiona Graham said “The months ahead will continue to be challenging for family businesses. But today’s Budget includes good news about the short-term support available, and does give certainty for family businesses to be able to plan and invest in their futures.” Read the IFB’s full response here.
On this page you can find details on the announcements made in the Budget, as well as more links and information on where to go to get guidance, support and how to access some of the schemes announced.
The Chancellor announced the launch of two new business support schemes to support SMEs. Help to Grow: Management and Help to Grow: Digital aim to help small and medium sized businesses across the UK learn new skills, reach new customers and boost profits.
The Small Business Charter has partnered with the Government to deliver Help to Grow: Management, which will support 30,000 senior managers of small and medium sized businesses to boost their business’s performance, resilience and long-term growth. The 12-week programme is 90% funded by the Government and has been designed to allow participants to complete it alongside full-time work.
The in-depth, high quality curriculum will support managers to build capabilities in leadership, innovation, digital adoption, employee engagement marketing, responsible business and financial management. By the end of the programme, participants will have developed a business growth plan to help their business recognise its full potential.
UK businesses from any sector that have been operating for more than 1 year, with between 5 to 249 employees are eligible. The participant should be a decision maker or member of the senior management team within the business e.g. Chief Executive, Finance Director etc.
This Autumn, small businesses will be able to get free impartial advice on how technology can boost their performance through a new online platform, through Help to Grow: Digital.
Eligible businesses will also be able to get a discount of up to 50% on the costs of approved software, worth up to £5,000. Vouchers are initially expected to be available for software that helps businesses build customer relationships and increase sales, make the most of selling online, manage their accounts and finances digitally. The voucher is expected to be available to UK business that:
- employ between 5 and 249 employees and are registered at Companies House
- have been trading for more than 12 months
- are purchasing the discounted software for the first time
Full details will be published in the summer. In the meantime, find out more here.
Corporation Tax and Investment Support
The Chancellor announced that Corporation tax will increase to 25% from April 2023. Businesses with profits of £50,000 or less will continue to be taxed at 19%, and a tapered rate will also be introduced for profits above £50,000. Businesses with profits of £250,000 or greater will be taxed at the full 25% rate.
You can find out more about the new rates and thresholds here.
Beginning April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130% of the cost.
From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:
- a 130% super-deduction capital allowance on qualifying plant and machinery investments
- a 50% first-year allowance for qualifying special rate assets
You can find the detailed guidance on the new super deduction here.
The Budget also announced that the tax treatment of losses will become more generous, extending the loss carry back rules worth up to £760,000 per company.
A review of research and development tax reliefs was also launched. It closes on 2 June 2021. The consultation will explore the nature of private-sector R&D investment in the UK, how that is supported or otherwise influenced by the R&D relief schemes, and where changes may be appropriate. You can find the consultation, and information on how to respond, here.
The Budget also included additional announcements on skills. These included:
- Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
- £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
- Additional £126 million for 40,000 more traineeships in England, funding work placements and training for 16-24 year olds in 2021/22 academic year.
The Chancellor also provided updates on the business support which has been made available during the pandemic. This included the following announcements:
- Furlough scheme extended until the end of September.
- As businesses reopen employers will be asked to contribute towards furlough, paying 10% from July and 20% in August and September.
- Launch of a new restart grant in April. Non-essential retail businesses will be able to apply for up to £6,000 per premise. Hospitality and leisure businesses including personal care and gyms will receive up to £18,000.
- The temporarily reduced 5% VAT rate for hospitality and tourism will be extended until 30 September. This will increase to 12.5% until 31 March 2022, before returning to full rate.
- A new Recovery Loan Scheme will also be launched to replace the existing government guaranteed schemes. Businesses of any size can apply for loans for £25,000 up to £10m until the end of this year and the Government will provide a guarantee to lenders of 80%.
- Business rate holidays to continue until the end of June. For the remainder of the year rates will be discounted by two third up to a value of £2m for closed businesses and a lower cap for those that have been able to remain open.
- Small and medium-sized employers 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.
Find out more about all the support available here.