Many people ask what has the UK budget for 2021 brought for them? Well, let's explore! Since the last budget of 2020, the business climate has changed completely. COVID-19 pandemic has become a hum of government spending. The government has spent around £280 billion to support jobs for individuals and businesses through the period. The recently lifting of restrictions has enabled companies to plan for a return to normal life. Now the Government has delivered the last piece of the puzzle for short-term financial support.
The Government has split the 2021 budget into three parts in order to continue the support until the end of September 2021 and start repairing the damage to the UK's financial situation and fuel future growth. Some of the highlights of the budget are:
· The vacation support (coronavirus job retention program) grant will continue until the end of September 2021, but employers will fund 10% of a worker's unused hours in July, then 20% in August and September, plus existing pensions and NIC expenses.
· The Self Employed Income Support Program gives individuals a fourth grant equal to 80% of the company's average income for three months, with a maximum of £ 7,500 for the months of February to April. The fifth scholarship runs from May to September but for those whose sales have decreased by less than 30%, the scholarship is capped at £ 2,650.
· Income tax credits and NIC exemptions for employer-provided COVID-19 antigen testing and reimbursement for home office equipment will continue through April 5, 2022.
· Commercial rate relief for retail, hospitality and leisure businesses with a 100% rating will last through June 2021 and increase to 66% by March 31, 2022, with a maximum of £ 2 million per transaction. The VAT rate of 5% for leisure activities will remain in effect until September 30, 2021, after which a new rate of 12.5% will apply until March 31, 2022.
· The zero stamp tax rate on property tax of £ 500,000 will remain in place through June 30, 2021, then it will be reduced to £ 250,000 by September 30, 2021, and then reduced to £ 125,000. This will further boost home buying, as will the government's new 95% home mortgage guarantee for up to £ 600,000 worth of the home.
· Companies, whether incorporated or not, can benefit from the ability to carry forward losses of £ 2 million incurred in fiscal years 2020/21 and 2021/22 over a three-year period. This is considered a package that allows businesses to reclaim up to £ 760,000 in corporate tax.
· Companies also benefit from a capital reserve for the first year of 130% for machines and equipment purchased between April 1, 2021, and March 31, 2023, with a new reserve of 50% for the first year in special interest investments (excluding operating leases) ). , Second-hand goods and cars. ). ). This advisor said it was a "huge discount" on the investment. The £ 1 million annual investment will continue to be awarded to businesses through December 31, 2021. This will boost corporate spending on capital goods over the next two years.
· However, corporate income tax will rise to 25% from April 1, 2023 (the skewed income tax will also rise to 31%). A low-income tax rate of 19% will be reintroduced, but at a profit level of less than £ 50,000, with the corporate tax rate reduced to 25% for a profit of £ 250,000. That leaves 70 percent of companies paying corporate income tax at the lowest level. There is also an 8% surcharge for banks. These changes in corporate tax rates are one of the main sources of additional funding for the state in the medium term, the other being the freezing of personal thresholds.
· Free ports will benefit from several favorable tax breaks through September 30, 2026. A rate of 10% for construction and construction compensation, 100% compensation for machinery and equipment, 100% tax exemption from stamp duty, and 100% exemption from commercial tariffs. The government intends to exempt employers' social security contributions from April 2022 to April 2026.
In short, the government hopes for a strong growth recovery in the medium term and has taken appropriate steps. While business support runs through September 2021, there will be a cash flow ramp by then when most of the support packages expire. New amortization loan programs with 80% government guarantees and restart grants for individuals, housing, leisure, personal care, and gyms can help businesses get back on track.