Posted on: 03 March 2021
What does the 2021 budget announcement mean for your business?
On 3rd March 2021, the UK Government announced the UK budget, which is where they outline how they will be spending money to help the UK grow as well as new tax measures to help support the budget.
This year’s budget comes following the Summer Economic Update from 2020, where the government had to react to the ongoing COVID-19 pandemic. The Chancellor of the Exchequer has announced a further £65bn of support in this new budget.
This year’s budget has also addressed how the government will allocate spending now that there is a roadmap to get the UK back to normal.
What are the key announcements for businesses
COVID-19 has caused unprecedented financial damage to the UK through job losses, PPE and vaccine procurement costs and welfare spending. To help continue to combat COVID-19, the government has announced the following financial measures:
- An additional £1.65bn of funding to support the COVID-19 vaccination rollout.
- £22m is also being provided to research the effectiveness of mixtures of the Pfizer, Astra Zeneca and Moderna vaccines.
- £28m of the Vaccine Taskforce’s budget will be redirected to help identify new variants.
- £5m will be given to the Centre for Innovation in Darlington, which will build a library of vaccines that they can use against new variants.
Additional to the COVID-19 support, businesses will also receive the following support:
- The furlough scheme will be extended until September 2021, with no changes made to how businesses claim. After July, businesses will be expected to contribute 10% of the furlough wage, rising to 20% in August and September.
- Providing self-employed people have put in their tax returns by 2nd March, 600,000 more self-employed people will be able to access support grants.
- Restart grants will be made available starting in April, with grants for £6,000 for non-essential businesses when they are allowed to reopen.
- Businesses still operating with restrictions when they reopen, such as hospitality and leisure businesses, can receive grants up to £18,000.
- The incentive to take on a new apprentice will be increased to £3,000 per new apprentice.
- A dedicated £700m for businesses in the arts & sports industries will be available, and there will be £500m for businesses in the film industry.
- Retail, Hospitality and Leisure businesses will continue to benefit from the business rate holiday for the three months April to June. For the remaining 6 months of the tax year, business rates will be discounted by 66%.
- The VAT rate of 5% will be extended until 30th September. An interim rate of 12.5% will be set for the following 6 months, going back to 20% in April 2022.
Environment and Science
Even with the COVID-19 pandemic causing havoc within the UK, the environment is still high on the agenda for the government. The following measures were announced to help protect the environment:
- A new UK Infrastructure bank based in Leeds will invest in new public and private infrastructure.
- New retail savings product to give all UK savers the chance to support green projects.
- £1.6bn of funding for research and development for vaccines.
- Visa reforms to attract highly skilled overseas workers thus attracting the best talent in science, research and technology to the UK.
Other important updates
- The £20 uplift per week for receivers of universal credit will stay for 6 months.
- National Living wage rising to £8.91 in April.
- £19m to provide support for domestic violence organisations.
- £10m to support veterans with mental health needs.
- Guaranteed lifetime funding for Thalidomide scandal support.
- Mortgage lenders will offer 95% mortgages.
- 90% of costs covered for Help to Grow schemes. Free training for digital skills and productivity-enhancing software. Business can register for Help to Grow here.
- All measures outlined in the budget will apply to all 4 countries in the UK.
New tax measures
Income tax rates will be frozen with tax limits raised to £12,570 for those on the basic rate. Higher tax bracket payers will have a new threshold of £50,270.
Both of these rates will be frozen until at least 2026.
The VAT registration threshold will stay at £85,000 until 2024.
Corporation tax to rise to 25% on profits from April 2023, however, this will still be the lowest tax rate of all G7 countries. Although, this will only apply to those companies with profits over £50,000 per year.
The Small Profits Rate of 19% will remain for businesses with profits under £50,000 until April 2023 and then increase to the higher level of 25%.
There will also be a new Super Deduction, which will allow businesses to write 130% off their tax bill when they invest in their business.
The planned increase for whisky, beer, wine and cider will be stopped to keep alcohol taxes at the same rate for the second year.
The proposed rise for duty on fuel will also be cancelled.
A Freeport is an area or zone that is designated by the government to have little or no tax imposed to encourage economic investments.
There will be 8 new Freeports introduced to the UK to help growth, which will be based in:
- East Midlands Airport
- Felixstowe and Harwich
- Liverpool City Region
Business insurance with Premierline
It’s important to make sure that you have the right insurance in place to protect the business that you have built.
Every business is different and has its own business insurance needs, which is why we work with some of the UK’s most well-known insurers to make sure that you are getting the right insurance cover for your business.
To help you and your business during these unprecedented circumstances, Premierline has taken steps to ensure that we can continue to offer our award-winning service.
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Business Guidance11 February 2021
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