Having watched The Budget we’ve extracted the information which we believe is the most relevant to the small business sector and in the areas that will most impact your businesses going forward.
Although a rise in corporation tax has been announced, the good news is that this rise is not coming into effect until 2023. This gives us 18 months to check the position of each of our clients.
We don’t have full details yet of this corporation tax rise, but as soon as we do, we will build the tools to provide the answers you need.
COVID -19 Support
Furlough
The furlough scheme has been extended to September 2021, in the months of August and September the employer will be asked to contribute 10% and 20% respectively of any furloughed employees’ salary. It will be worth considering before August whether you will in fact have to make redundancies.
Chippendale and Clark’s process will remain the same to September. If you need to make new furlough claims, then let us know.
The minimum wage is increasing in April to £8.91 for all over 23-year-olds, other rates apply for lower ages. We have already brought this to the attention of most our clients where appropriate.
SEISS – Self Employed Income Support Scheme
It has been confirmed there will be a 4th (February to April) and 5th grant. The 5th grant will be greater based on whether your turnover is down more than 30% on the previous year. We will be expecting more details shortly but as per the last few grants we cannot make these claims on your behalf. We are happy to advise and offer our opinion on whether they should be claimed for, or not. We can also only comment on turnover drop percentage if we undertake monthly bookkeeping for your business. If this is something you would be interested in, please let us know.
If you started your business in 2019/2020 you were previously not eligible for the SEISS scheme, this has now changed and if needed you will be eligible to claim as long as you submitted a 2019/2020 return by 28/02/2021. (All of our clients returns were completed by the end of January at the very latest.)
Further Grants
Shops, hospitality, and leisure businesses are eligible for the new restart grants. These will be paid through the council and as per the recent grants we are almost certain that if you are eligible for these grants you will not have to apply again.
These grants are worth up to £6,000 for non-essential retail and up to £18,000 for Hospitality and Leisure.
These are all the details we currently have.
Business Loans
The CBILS scheme and the bounce back loan scheme are going to be combined into a new loan scheme called the recovery loan scheme.
There will be loans available of £25,000 to £10 million, we suspect that you will be able to convert your existing bounce back or CBILs loan into this new type of loan if you wanted to extend your funding. However, this is currently only speculation.
Further details will be released as and when we get them.
Business
Employment Schemes
If you are looking to employ people in your business, there are a couple of excellent schemes available.
Kickstart Scheme – The Government will pay 100% of national minimum wage for new 18-24 year old hirees who were on universal credit.
Apprenticeship Scheme – The minimum grant of £1,500 is now doubled to £3,000. Chippendale and Clark will be looking to hire a new apprentice in the coming months.
These are excellent schemes if you are looking to expand or maybe replace an existing leaving employee.
Business Rates
The business rates holiday is set to continue for hospitality and non-essential retail for the first 3 months of the year, after this period rates will be discounted by two thirds for the remaining 9 months.
5% Vat Rate for hospitality
There is currently a 5% vat rate for food and drink, this has been extended to September. After September, the vat will increase to 12.5% for a further 6 months before finally rising back to the standard 20%.
It’s vital that tills systems are amended and tested thoroughly. If you need help let us know.
Business Tax
For those of you who are limited, the big announcement is that corporation tax is to rise from 19% to 25%, but do not get annoyed just yet.
25% rate only applies to companies earning over £250,000 in profits (not turnover).
The 19% rate will stay for profits below £50,000.
The corporation tax rate is then tapered (we do not know details yet) from 19% at £50,000 profits to 25% at £250,000 profits.
The rate rise is for periods starting after April 2023, so for period ending March 2024. We have time to plan!
As your accountants we will be investing into tax planning for every one of you who are affected. I must stress this will not affect everyone and for those it does affect, as always, we have options to counter this rate rise with tax planning, using pensions and other investments (see next section).
Investment Super Deduction
Profits are reduced by investments into equipment needed for trade. This new super deduction will allow us to amplify spending to 130% of the invoiced amount to lower profits and therefore corporation tax.
Once we know more details, we will be offering advice on when and how to spend (if you need to).
Personal Tax and Issues
There were no rises to income tax or national insurance. However, 0% and higher rate bands are frozen. You will not notice the effect of this.
The stamp duty holiday has been extended to September with a phased reduction in effect, the nil rate band will be reduced from £500,000 to £250,000 and then back to the original £125,000.
95% Government backed mortgages have now been announced this combined with the stamp duty holiday should allow lots of new people to be able to afford homes. We can recommend a mortgage advisor that works for business owners if you are looking at buying a house.
Tax Evasion
£100 million has been set aside to fund 1,000 furlough tax inspectors.
We recommend that if we’ve made furlough claims for you, and you’ve opted out of our tax investigation service you contact us to opt back in ASAP.
Our fixed fees do not cover HMRC inspections without this cover.
Conclusion
Nothing is going to change overnight, and we are already making plans to review all structures, tax planning, and allowances for each client. So please be reassured that this is in hand.
If you have any questions on business loans, cash flow, mortgages or employment schemes or anything else in this announcement please contact us.
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