In his recent announcement (3 March 2021), the Chancellor announced new support for employers and businesses.
We have summarised the announcement below, should any of these announcements apply to you or your business, please contact us for more information.
The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021.
The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
Employers will need to continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. This means, for periods between July and September, employers will need to fund the difference between this and the CJRS grants themselves. Employers can also top up wages above the 80% if they wish, but they are not required to do so.
Employers must also continue to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.
CJRS eligibility from May
For periods from 1 May 2021 onwards, employers will be able to claim for eligible employees who were on employers’ PAYE payrolls on 2 March 2021. This means they must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying us of earnings for that employee.
The Self-Employment Income Support Scheme (SEISS) will continue until September with a fourth and fifth grant.
The fourth and fifth grants will take into account submitted 2019-20 tax returns. This means you may be able to claim, even if they were not eligible for previous grants. Your clients must have submitted their 2019-20 tax returns by 2 March 2021 to be eligible for the fourth and fifth grants.
The UK Government will pay a taxable grant, which is calculated based on 80% of three months’ average trading profits, paid out in a single payment and capped at £7,500 in total. The value of the grant is based on an average of your client’s trading profits for up to four tax years between 2016 to 2020, where available.
The grant will be available to claim from late April. As with previous grants, trading profits must be no more than £50,000 and at least equal to non-trading income in order to claim the fourth SEISS grant.
Eligibility for the fourth SEISS grant will also depend on whether you experienced a significant financial impact from coronavirus between February 2021 and April 2021.
As the calculation now takes into account the tax year 2019-20, your clients who previously claimed SEISS grants may receive grants that are higher or lower in value than any previous SEISS payments they received.
From mid-April, your clients will be given their personal claim date by HMRC, which confirms the earliest date they can claim. We are inviting customers to claim on different days to ensure the system is fast and easy to use.
The online claims service for the fourth grant will be live from late April. This is to allow us time to process recently submitted 2019-20 Self Assessment tax returns.
You must make their claim for the fourth grant between their personal claim date and 31 May 2021 at the latest.
You will need to make an honest assessment that there has been a significant reduction in trading profits due to reduced demand or their inability to trade, and to keep appropriate records as evidence.
The UK Government has also announced that there will be a fifth and final SEISS grant covering May to September. The amount of the fifth grant will be determined by how much your turnover has been reduced.
The grant will be worth 80% of three months’ average trading profits, capped at £7,500, for those with a higher reduction in turnover (30% or more). For those with a lower reduction in turnover, of less than 30%, then the grant will be worth 30% of three months average trading profits.
You will be able to claim the fifth grant from late July if they are eligible. Further details will be provided on the fifth grant in due course.
Aimed at helping businesses re-open, the restart grant will provide non-essential retail businesses up to £6,000 per premises. Those business in hospitality and leisure (including personal care and gyms), which will open up later, will receive up to £18,000.
New recovery loan scheme
As the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) programs come to an end, the government is introducing a new initiative that will provide loans from £25,000 up to £10 million. Businesses of any size can apply and the government will guarantee 80% of the finance to lenders.
Between 1 April 2021 and 31 March 2023, companies investing in qualifying, brand-new plant and machinery assets will benefit from a new 130% first-year capital allowance. They will also benefit from a 50% first-year allowance for qualifying special-rate assets. Any purchases already contracted before 3 March will not be eligible.
The business rates holiday for retail, hospitality and leisure will continue until the end of June.
For the following nine months, it will be discounted by 66% up to the value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.
Extending the reduced VAT rate
The reduced VAT rate of 5% for hospitality and tourism will be extended until 30 September.
It will then revert to an interim rate of 12.5%, not returning to the standard rate until next April.
If you deferred VAT payments due between 20 March and 30 June 2020 and still have payments to make, you should pay by 31 March if you can.
If you cannot afford to pay by 31 March this year, you can now join the online VAT deferral new payment scheme to spread the payment.
The new scheme lets customers pay their deferred VAT in equal monthly instalments, interest free. They can spread payment across a number of months, depending when they join – the earlier they join, the more months they have to spread the payments across:
You can join the scheme quickly and simply online, without the need to call HMRC. To find out more information, including the things customers need to do before joining, go to GOV.UK and search ‘VAT deferred’.
The online service will close on 21 June 2021 – if you want to join the scheme online, they must do so before this date.
The housing market received another boost, with the extension of the stamp duty land tax rate cut and the introduction of a mortgage guarantee scheme. This will run from April 2021 to December 2022 to provide guarantees to lenders offering mortgages to people with deposits of 5% on homes with a value of up to £600,000.
The stamp duty nil-rate band will then fall from £500,000 to £250,000 from 30 June until the end of September, before returning to its usual level of £125,000 from 1 October.
Personal tax thresholds will be frozen until 2026. The tax-free allowance will rise to £12,570 next year until 2026, and the higher-rate level goes to £50,270, and then freezes.
The nil-rate band of inheritance tax, the capital gains tax annual exempt amount and the pension lifetime allowance will also be frozen until 2026.
Corporation tax up to 25%
The headline corporation tax rate will rise to 25% from April 2023. There will be some exemptions and tapering, however, with the small profits rate maintained at the current rate at 19%. A taper above £50,000 will mean that only businesses with profits of more than £250,000 will be taxed at the full 25% rate.