BUDGET 2021 - KEY ISSUES

Furlough scheme

• The furlough scheme will be extended until the end of September 2021, and employees will continue to receive 80 per cent of their salary for hours not worked.

Benefits and social policies

• The national minimum wage will be increased to £8.91 per hour from April.

• £20 weekly increase for Universal Credit will continue for a further six months.

Personal taxation

• Government will not raise the rates of income tax, national insurance, or VAT but will freeze personal tax thresholds at the current level.

• The personal tax allowance will increase again next year to £12,570 and be held there until April 2026.

• The higher rate threshold will be increased next year to £50,270, and will then also remain at that level until 2026.

• Sunak said the inheritance tax threshold, the pensions lifetime allowance and the annual exempt amount in capital gains tax will be held at current levels until April 2026.

• The Office for Budget Responsibility (OBR) revealed the Chancellor's move to freeze the income tax personal allowance and higher rate threshold for four years will bring 1.3 million people into the tax system and create one million higher rate taxpayers by 2025-26.

Business taxation and support

• Sunak said a 'new restart grant' will be provided in April to help businesses reopen.

• He told MPs non-essential retail businesses will receive grants of up to £6,000 per premises.

• Hospitality and leisure businesses, including personal care and gyms which open later, or are more impacted by restrictions when they do will get grants of up to £18,000. That totals £5 billion of new grants, on top of the £20billion already provided.'

• When the Bounce Back Loan and CBIL schemes come to an end a new recovery loan scheme starts with loans from £25,000 up to £10million available through to the end of this year.

• Sunak said the 100 per cent business rates holiday in England will continue from April until June.

• The 5 per cent reduced rate of VAT will be extended for six months to September, then an interim rate of 12.5 per cent will be introduced for another six months.

• Corporation tax paid on company profits will increase to 25 per cent in 2023.

• Small businesses with profits of £50,000 or less will be kept on the current rate of 19%. This accounts for around 70 per cent of companies - 1.4 million businesses.

• A taper above £50,000 will also be introduced to ensure only businesses with profits of £250,000 or greater will be taxed at the full 25 per cent rate.

• The OBR said the corporation tax rise will raise 3.2 per cent of GDP in revenue by 2025-26 - its highest since 1989-90.

• A £150million Community Ownership Fund will provide grants of up to £250,000 to help rescue pubs and other businesses that are at threat of closing permanently.

Housing

• Sunak told MPs the £500,000 nil rate stamp duty band will not end on 31 March, it will run to 30 June 2021.

• To 'smooth the transition back to normal', the nil rate band will be £250,000, until the end of September and the usual level of £125,000 from 1 October.

• Sunak announced a 'mortgage guarantee' with homebuyers who can only afford a 5% deposit benefiting from a Government guarantee on their mortgages.

• Lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month.

Alcohol and fuel duties

• The planned increases in duties for spirits, wine, cider and beer will all be cancelled, Sunak said.

• Similarly, the scheduled increase in fuel duty is cancelled.

If you wish to discuss any of the above further or any other matters, please get in touch

Gary Worsdell Glen Worsdell

07747 850 918 07525 828 290

Bournemouth Office London office

01202 259 200 020 3026 5008

Software for your needs

We have developed a full complement of software offerings to enable your business, no matter what the size to keep accurate and up to date records. This is a key part of being able to manage and develop your business from where it currently is to where you want it to be.

We have offerings for accounting software from a sole trader business to Limited companies. So please get in touch to discuss.

QuickBooks

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Both of these accounting software solutions are cloud based and very user friendly. If you are looking for a accounting software solution please get in touch for a free initial discussion on what we feel would best suit your needs.

EASING OF LOCKDOWN – ARE YOU PREPARED?

Given the recent Government announcement that we are slowly coming out of lockdown and the road map for how we will return to the “new” norm.

Is your business prepared for this and are you in the right mind set? Below we have noted down a view items that we feel will put you in the best position to know where you are and prosper in the easing of lockdown.

· Forecast and budgets – Given the last few months and the impact this has had on business and cashflow, it is now time to firstly look over current budgets and re-evaluate the assumptions built into these. Cashflow will undoubtable have been strained during this time so we would always recommend an integrated cashflow with the budget to ensure you are fully aware of any potential pinch points and can plan and prepare for these.

· Look at what worked well during lockdown – Rather than focus on the less successful events from the situation consider what has worked well. This may not be just a financial gain; it could be personal. We are aware of a number of restaurant’s and Café’s that have put takeaways in place during this time and say they are surprised how well this has gone down and it will be shame when have to stop post lockdown, why stop?

· Working from home will most likely become the new normal – In many industries there has been resistance to working from home. This has now been broken and will be seen as the normal, you should therefore incorporate this into any future business plans. This could mean that office space is now in excess, or that IT systems need upgrading. I think many staff have seen the benefits of working from home on would welcome a continuation of this on at least a part time basis or more flexible basis.

· IT structure – this period has proved that IT structure is key to keeping a business running during these times. With face to face contact taken away, we have all had to take to virtual meeting platforms. This has in the main proved to be successful and I have heard a number of comments from clients who would pre Covid19 spend hours travelling for meetings, when now they have seen virtual as an extra option (not in all cases) which could save a large chunk of travelling time that could be used for more productive matters.

· Marketing – As the world has effectively been closed for 3 months the opening up is your time to get noticed and gain the completive edge over your fellow businesses.

We will all have changed because of this situation and the world will not go back to the old ways fully. As always we are more than happy to discuss any issues you have and assist any way we can, call today to take advantage of our free initial meeting.