Starting a new business? Get 40% off our accountancy services for 3 months! 😀

x

Important information for small businesses, sole traders, and employers in the UK following the 2021 Budget

The 2021 Budget has been delivered to Parliament, announcing measures affecting UK businesses. Find out what grants, help and support are available to your business, as well as other key changes.

Budget 2021 for employers

The Chancellor’s statement set out extensions to support available to employers affected by COVID-19. There are also changes to the National Living Wage, and new incentive schemes targeting work-based training.

Coronavirus Job Extension Scheme (CJRS) furlough arrangements extended

The Coronavirus Job Retention Scheme (CJRS) scheme was brought in to help employers avoid making staff redundancies as a result of COVID-19. Rather than making cutbacks, employers can instead furlough employees and claim a government grant for the salary costs.

As part of the government’s plan for ongoing economic recovery, the furlough scheme has been extended again – this time until the end of September 2021. The terms of the grant will change in stages.

CJRS until July 2021

Coronavirus Job Retention Scheme

CJRS in July 2021

Coronavirus Job Retention Scheme - From July

CJRS in August and September 2021

Coronavirus Job Retention Scheme - For August and September

 

Reclaim sick pay for COVID-19 sickness absences

The Coronavirus Statutory Sick Pay Rebate Scheme has been extended for employers again. It enables employers to reclaim a maximum of two weeks’ worth of SSP which has been paid to staff for sickness absences as a result of COVID-19.

Employer incentives for trainees and apprenticeships

Part of the COVID-19 recovery plan includes incentives for employers to provide work-based training and apprenticeships.

Apprenticeship funding

Employers who take on a new apprentice between 1 April 2021 and 31 September will receive £3,000 of funding from the government. Unlike previous versions of the scheme, this is available for apprentices of any age, and not just those aged 24 and under.

Portable flexi-job apprenticeships

Employers will have access to funding from July 2021 which enables them to offer portable apprenticeships. It means that employers will be able to share training and resources, so apprentices can work for different employers within the same sector, expanding their skills and knowledge.

Employer funding for traineeships

In addition to apprenticeship funding, employers can also access grants of £1,000 per trainee in order to provide work placements to those aged 16-24.

Check out our Taking on Trainees and Apprentices – What’s In It for You? article for more information.

National Living and Minimum Wage changes

The National Living Wage (NLW) is the minimum amount which employers must pay to staff of a certain age. Previously available to those aged 25 and over, from 1st April 2021 this applies to employees aged 23 upwards, and the rate will increase from £8.72 to £8.91 per hour.

The National Minimum Wage for apprentices and other age groups will also change from April 2021.

 

National Minimum Wage and National Living Wage 2021

What the 2021 Budget SEISS extension means for sole traders

The SEISS grant for self-employed workers has also been extended in line with the furlough scheme.

Covering February, March, and April

The government first announced a SEISS grant for this period in November 2020 as part of their Winter Economy Plan. The 2021 Budget announcement sets out the terms of the grant in more detail.

This will be the fourth run of the SEISS grant, and offers 80% of 3 months’ average trading profits paid as a single instalment up to a maximum of £7,500. Anyone who has already submitted their 2019-20 Self Assessment tax return will be eligible. The calculation to work out claims also takes that tax return into consideration.

Covering May to September 2021

The amount you can claim for the fifth SEISS grant depends on how the pandemic has affected turnover for your business in the April 2020 – April 2021 tax year.

How much can you claim for the SEISS Extension grant?

 

Landlords, house buyers, and the Budget

Amongst the announcements are measures which aim to support the property sector. These include:

Replacing COVID loans with the Recovery Loans Scheme

The government guaranteed Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS) were available as part of the wider finance relief package in response to COVID-19.

These are now changing to a new Recovery Loan Scheme, giving eligible businesses access to borrowing of between £25,001 and £10 million. There is also provision for asset and invoice financing between £1,000 and £10 million for businesses of all sizes.

instant quotes for online accountancy

What the 2021 Budget means for the hospitality, retail and leisure industry

Business sectors that are reliant on social contact and free movement have been particularly badly affected by the coronavirus crisis. New measures, and extensions to existing schemes, aim to support hospitality, leisure and retail businesses.

VAT reduction extended again

Initially taking effect from 15th July 2020, the VAT rate for hospitality, accommodation and attractions has been temporarily cut from 20% to 5%.

This was due to return to normal at the end of March 2021, but will now continue throughout the April 2021 – April 2022 tax year:

 

Find out more about the temporary VAT rate reduction in our article

 

Business rates relief for some sectors

Hospitality, retail and leisure businesses in England will benefit from a continuing holiday on business rates. The year-long relief plan was due to end at the end of March 2021, but will now continue for English business until 30th June 2021. Further reductions will be available to businesses required to close during lockdown.

The business rates holiday for these sectors in Scotland will continue throughout 2021-2022, with Wales yet to announce plans.

Restart grant to help locked-down businesses reopen

The 2021 Budget includes one-off cash grants for businesses forced to close during lockdown periods. Available in England, the restart grant aims to support businesses as they prepare to re-open, awarding:

Contactless payment limits increase

To help businesses re-open safely, the contactless payment limit for customers paying by card is increasing from £45 to £100.

Tax rates, reliefs, and allowances

A variety of new and extended tax rates and reliefs have also been confirmed.

Tax relief for businesses suffering losses

Under normal rules businesses can carry back trading losses, and put them against profits in the previous year. This way the business can claim a repayment of the tax already paid in the previous year.

To help businesses that are struggling as a result of COVID-19’s impact, the carry back period was extended from one year to three. Rather than only off-setting trading losses against the previous year, businesses may be able to claim tax repayments from the previous three years.

Income Tax rates and allowances

Whilst neither the rate of Income Tax or National Insurance has changed, the payment thresholds have.

Income tax threshold changes
National Insurance threshold changes

Corporation Tax increase

The increase in Corporation Tax rates won’t actually take effect until 2023, and doesn’t necessarily apply to all limited companies.

The temporary super-deduction for capital allowances

The introduction of a new two-year ‘super-deduction’ temporarily increases first-year capital allowances to 130% for purchases of plant and machinery assets which qualify. There’s also a 50% first year allowance for special rate assets which qualify.

Check out our Super-Deduction Tax Rules article for more information.

 

We know running a business can be hard work. Talk to one of the team about our online accountancy services by calling 020 3355 4047, or book a free call back.

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible.

guest
0 Comments
Inline Feedbacks
View all comments

Read more posts...

What Employers Should Know About Payroll Giving

Payroll Giving – also known as Give As You Earn (GAYE) – has been around for some time now but a sizeable…

Read More

National Insurance, Dividend Tax, and the Health and Social Care Levy

What the changes mean for employers, employees, and the self-employed The UK government announced their new plan for health and social care…

Read More

Can Self-Employed People Get Help with Childcare Costs?

Being self-employed can mean that your working hours are more flexible than they would be for an employer, but caring for children…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.

Bookkeeping

You only need this service if you want us to complete the bookkeeping on your behalf.

Would you prefer to complete your own bookkeeping?

Yes
No

Call us on 020 3355 4047 if you’re not sure.