Yesterday’s UK Budget provided some positive news for our SME clients.
Business grants, the stamp duty holiday extension and the still competitive corporation tax rates increases (which are not due to be implemented until 2023 in any event) will be well received.
The widely-anticipated stamp duty holiday extension should help stimulate the property market, which may assist our clients looking to invest in real estate.
Budget 2021 business highlights:
- Corporation tax on company profits with £250,000 or more will rise from 19% to 25% in April 2023. This increased rate remains competitive within the G7. Companies with profits of £50,000 or less will remain at 19% with a “tax tapering” in between the two.
- An unprecedented super-deduction of 130% on tax for investments made by companies will be available for the two years from April 2021 and would mean that firms can cut their taxes by up to 25p for every pound they invest in their UK costs.
- Stamp duty holiday on properties up to a value of £500,000 will be extended to 30 June. The floor for paying stamp duty will remain at £250,000 until 30 September and then it will return to the original level of £125,000.
- Carry-back trading loss feature is extended from one-year to three-year carry-back for company accounting periods ending between 1 April 2020 and 31 March 2022.
- Personal allowance will rise from £12,500 to £12,570 from 6 April 2021 and then be frozen until April 2026. Higher rate income tax threshold will be frozen at £50,270 until April 2026.
- £5bn in “Restart Grants” – up to £6,000 for business reopening, an additional £425m of discretionary business grant funding – and new “Recovery Loans” between £25,000 and £10m available until the end of the year.
- Extending the Furlough scheme and the Self-Employed Income Support Scheme until the end of September.
- Doubling apprentice payments to £3,000 for all new hires, of any age.
- Hospitality and leisure businesses: 5% reduced rate of VAT will be extended until the end of September. Then it will be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022.
- Penalty of 5% introduced in relation to the Deferred VAT Payment Scheme.
- Eight freeports to be introduced – special economic zones with different rules to make it easier and cheaper to do business. They will include infrastructure planning, customs and favourable duties and taxes.