Keep On, Keepin’ On - 2021 Budget temporarily extends support measures

The 2021 Budget has plenty of news and items of interest for business – including support measures being extended and some new initiatives.


Keep On, Keepin’ On – how the 2021 Budget temporarily extends support measures

Budget 2021

 

The 2021 budget announced by Chancellor Rishi Sunak yesterday contains more news items for businesses than you’d immediately spot or was expected.

 

Despite several announcements, there was no change to Capital Gains Tax or Business Asset Disposal Relief (BADR), meaning that there is still time to close a solvent business using a Members Voluntary Liquidation (MVL) and take advantage of the tax benefits before the end of this financial year at the end of March. 

 

The other main headlines that will affect companies include:

 

  • Corporation Tax

 

The first rise in Corporation Tax since 1974 was confirmed although it has been delayed until April 2023. The rate will rise to 25% for businesses making profits over £250,000 although any company earning less than £50,000 will continue to pay the current rate of 19%.  The rate will taper upwards for businesses as they get closer to the £250,000 level. 

 

  • Coronavirus Job Retention Scheme

 

The CJRS of job furloughs will be formally extended until the end of September 2021.  Employees will continue to receive 80% of their wages until then although businesses will be asked to contribute 10% in July and 20% in August and September.

 

  • Self Employed Income Support Scheme

 

Extended for a fourth time to cover the period from February to April. Will be based on 80% of average trading profits up to a maximum of £7,500. Applicable this time to those who have filed their 2019/2020 tax returns with HMRC.

 

  • Business Rates & VAT

 

Hospitality and Leisure businesses will pay no business rates between March and May 2021, then rates will be discounted by two thirds for the remaining nine months of the fiscal year. The 5% reduced rate of VAT will be extended until the end of September. It will then be gradually increased to 12.5% for six months before returning to the standard rate by April 2022. 

 

  • Additional Support 

 

There will be £5 billion of restart grants available for businesses to apply for once the lockdowns are gradually lifted later in the year. Additionally a new loan scheme will be launched to replace the Bounce Back Loans (BBLs) and Coronavirus Business Interruption Loan Scheme (CBILs). It will run until the end of 2020 and lend amounts from £25,000 to £10 million. 

 

Colin Haig, President of R3, the insolvency and restructuring trade body, said: “The Chancellor’s decision to extend the furlough scheme, to provide further business grants and a new loans scheme, and to continue the business rates holiday will give welcome certainty for many business owners concerned at their prospects over the coming months. 

 

“However, what was missing from the Chancellor’s Budget was detail about the Government’s role once these measures start to be withdrawn. 

 

“As a key creditor in most corporate insolvencies, the Government has a direct role to play in supporting viable restructuring and business rescue proposals. HMRC in particular has not always taken a constructive approach to these proposals, and we would like to see this change sooner rather than later. 

 

“By taking a more active and engaged stance as a creditor, the Government could help to save more potentially viable businesses, thereby safeguarding thousands of jobs, securing future tax income, and giving companies a chance to deal with liabilities resulting from the pandemic. 

 

“There’s no denying the Government’s COVID measures have helped business in the short term, but as the Chancellor pointed out, these can’t last forever. 

 

“Directors of struggling companies now have a few months in which to start making plans and taking decisions to secure the future of their businesses.”

 

 There’s no time like the present to start planning for a better future. 

 

While there is some degree of certainty about pandemic support measures being extended, they will end at some point meaning a cliff edge is waiting for some businesses that don’t take the necessary steps to secure their future now. 

 

Get in touch with us to arrange a free virtual  initial consultation, whenever it’s convenient for you.

 

We can help explore the support and options available to you and your business and put steps in place so that when circumstances change, which they will, you’ll be in a position to take advantage and literally profit.

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