As part of the latest Budget there were some new announcements relating to continuing financial support for businesses affected by COVID19. The main points to note are as follows:
Coronavirus Job Retention Scheme (CJRS)
The CJRS (furlough scheme) is being extended to the end of September, providing 80% of pay of hours not worked, up to the current cap of £2,500 per month. Up to 30 June HMRC will fund 80% of pay, with employers being responsible for employers’ NIC and pension contributions. HMRC support will drop to 70% in July and 60% in August and September.
Self Employed Income Support Scheme (SEISS)
The SEISS will also be extended to September but with some important changes:
- A fourth grant will be paid for the period February to April and claims will be open towards the end of April – no firm date yet. This will be set at 80% of average profits, as before, with a cap of £7,500.
- A fifth grant will be available for May to September, also at 80%, but only if turnover for 2020/21 has fallen by 30% or more. If turnover has fallen by less than 30% the grant will be at the rate of 30% of average profits.
Eligibility for both grants will include profits declared on the 2019/20 tax return and therefore those who were not previously eligible because they did not start self-employment until 2019/20, or whose self-employed earnings were not high enough in 2018/19 (perhaps because they had only just commenced self-employment) could be eligible for the fourth and fifth grants.
Some people could also cease to be eligible although earlier years profits will still be taken into account in calculating average profits where applicable.
From April 2021 a new Government backed loan scheme will replace the existing Bounceback Loan scheme. It will provide loans from £25,000 to £10 million with an 80% guarantee from the Government and will be available to any business which has been adversely affected by COVID including those who have already taken a Bounceback loan.
The Government will provide restart grants distributed through local Councils of up to:
- £6,000 per premises for non-essential retail businesses.
- £18,000 per premises for hospitality, accommodation, leisure, personal care and gyms.
- Additional discretionary grants will also be available.
Relief from business rates is being extended to 30 June for eligible retail, hospitality and leisure properties. For the remainder of the financial year to 31 March 2022 66% relief will be available.
VAT which was deferred from the period March to June 2020 and is due for payment by 31 March may be repaid in interest-free instalments over the period to 31 March 2022. Application must be made to opt into this scheme on the HMRC website.
The temporary reduced rate of 5% for hospitality, holiday accommodation and attractions is extended until 30 September 2021, when it will be replaced by a new 12.5% rate until 31 March 2022.
Other Budget announcements which may be relevant to business owners
- Increase in Corporation tax rate to 25%, but not until the period commencing 1 April 2023. The rate will not apply to profits up to £50,000 which will still be taxed at the current 19% rate, with a tapering rate on profits between £50,000 and £250,000.
- New “super deduction” for investment in plant and machinery between 1 April 2021 and 31 March 2023. This gives relief for 130% of expenditure, instead of the current 100%, but is only available to limited companies, not sole traders or partnerships.
- Loss relief for losses incurred in 20/21 and 21/22 will be able to be set back against earlier year profits for up to 3 years, instead of the current one year. This may allow greater relief to be claimed for losses arising due to COVID, and applies to sole traders and partnerships as well as limited companies.
As usual, if you have any questions about how these changes may affect you please get in touch, preferably by email in the first instance.