The Government delivered its 2021 Budget yesterday, which included a range of extended support for the self-employed and businesses affected by the COVID-19 pandemic. With an announcement that the economy has shrunk by 10%, which is the largest fall in over 300 years, the Chancellor stated that the Government would continue to do “whatever it takes”.
You can access the full Budget here. Don’t fancy reading the whole thing? We’ve pulled together a list of key measures from the Budget that SMEs might want to know about.
1. Furlough extended until 30 September 2021
The Coronavirus Job Retention Scheme (ie the furlough scheme) extension was initially due to end on 30 April 2021, but the Government has committed to extending it for a further 5 months. Employees will continue to receive 80% of their average pay for hours not worked, but employers will be expected to begin contributing from 1 July. For the month of July, the employer contribution will start at 10% of average pay for hours not worked, rising to 20% from August until the Scheme closes at the end of September.
We’ll be updating our furlough scheme resources to reflect the additional extension.
2. Extension of the Self-Employment Income Support Scheme (SEISS)
The Government previously announced that a fourth grant would be made available under the SEISS (to cover February to April 2021). The Chancellor has now confirmed that this grant will be set at 80% of average trading profits, capped at £7,500 in total for the three month period.
A further extension of the scheme has also been announced, which will provide a fifth (and final) grant to cover May to September 2021. This grant will be determined on the basis of an eligible individual’s turnover; those whose turnover fell by 30% or more will continue to receive a grant of 80% of three months’ average trading profits (capped at a total of £7,500), whilst those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.
Eligibility for the fourth and fifth grants under the scheme has been extended to cover individuals who were newly self-employed in the 2019-20 tax year, provided they have filed a 2019-2020 Self Assessment tax return. Further details are expected.
3. Help to Grow scheme to help SMEs boost productivity
Under this scheme, the Government intends to support SMEs through training and mentoring, access to discounted productivity-enhancing software and free technology advice.
Help to Grow: Management will provide SMEs (those with between 5 to 249 employees) that have been operational for more than 1 year with access to a 12 week business school programme and support from a business mentor. The programme will be 90% subsidised by the Government, with participants paying just £750.
Help to Grow: Digital will provide eligible SMEs (registered companies with between 5 and 249 employees that have been trading for more than 1 year) with discounts of up to 50% on approved software (worth up to £5,000). Approved software is expected to support businesses with increasing their sales, building customer relationships, optimising online sales and managing their accounts digitally. Free advice will also be made available.
You can register your interest and find out more about the Help to Grow scheme here.
4. Increases to the National Living Wage
The Chancellor reiterated that the National Living Wage (NLW) will be increasing from April; the rate will rise from £8.72 to £8.91 for those aged 23 and over. Our Q&A on staff pay will help you understand which of your staff are entitled to the NLW.
5. A Recovery Loan Scheme
From 6 April 2021, businesses of any size will be able to apply for loans of between £25,000 and £10 million, with the Government providing 80% guarantees to lenders.
6. Restart grants for businesses in the non-essential retail, hospitality and leisure sectors
Grants will be made available from April to help businesses in the non-essential retail, hospitality and leisure sectors re-open after lockdown. Grants of up to £6,000 will be available per premises for businesses in the non-essential retail sector, and grants of up to £18,000 per premises will be available to businesses in the hospitality and leisure sectors.
7. Continuation of business rates relief
100% business rates relief is set to continue for business premises in the retail, hospitality and leisure sectors until 30 June 2021. From 1 July 2021, 66% business rates relief will be available for eligible premises until 31 March 2022 (up to a cap of £2 million per business for properties required to close on 5 January 2021, or £105,000 per business for all other eligible properties).
8. VAT reduction for the hospitality and tourism sectors extended
The reduced VAT rate of 5% for goods and services supplied by the tourism and hospitality sectors will be extended for 6 months until 30 September 2021. From 1 October 2021, an interim rate of 12.5% will apply for a further 6 months until 31 March 2022.
9. Statutory Sick Pay Rebate Scheme to continue
The rebate scheme which allows SMEs to reclaim up to two weeks’ of eligible statutory sick pay paid to their staff will continue. No end date has yet been provided for this scheme. Our Q&A on payments during sickness absence explains how the scheme works.
10. Incentive payments for new apprentices to be doubled
The Chancellor announced that incentive payments for employers hiring new apprentices in England will be extended and doubled. From 1 April 2021 until 30 September 2021, employers will receive £3,000 for all new apprentice hires of any age. Want to know more about hiring an apprentice? Read our Q&A on Interns, apprentices and young people.
11. Increases to corporation tax from 2023
From April 2023, corporation tax will rise to 25% (from its current rate of 19%) for all profits over £250,000. Profits under £50,000 will continue to be taxed at 19%, with profits between £50,000 and £250,000 being taxed on an incremental basis.
We’ll be updating our resources as and when legal changes come into force. To keep on top of the latest developments, make sure you keep an eye on our blog or follow us on social!