Business rates and taxation – all you need to know from Budget 2021
Chancellor of the Exchequer Rishi Sunak made his Budget 2021 statement to the House of Commons last week, outlining the UK government’s approach to taxation and its packages of support to aid businesses and individuals during the Covid-19 recovery.
In the build-up to Budget 2021, various trade groups unilaterally called on Mr Sunak to focus largely on business rates for retailers and SMEs across the country. Although the Chancellor did not go as far as committing to radically overhauling the business rates system – as suggested by the Confederation of British Industry (CBI) – there was cause for optimism as support was extended while the economy undergoes a phased reopening through spring.
For eligible retail, hospitality and leisure businesses in England, the 100% business rates holiday has been officially extended until 30th June 2021. Mr Sunak also added that business rates from July onwards would be paid at just 33% of normal rates for the rest of the 2021-22 tax year, subject to caps of £2 million for bigger businesses.
In addition to this, non-essential retail units across England will also be eligible for Restart Grants. These one-off cash grants will cover £6,000 per premises, giving firms the financial support they need to reopen gradually in line with the phased easing of the nationwide lockdown.
The Chancellor also confirmed that the Coronavirus Job Retention Scheme (CJRS) – also known as the furlough scheme – has been extended until the end of September 2021. The furlough scheme was due to cease from 30th April 2021 but, in line with the UK government’s roadmap for reopening the economy, this extension was necessary to give SMEs certainty over their employee costs between now and autumn.
Employers must continue to pay their employees’ national insurance and pension contributions on hours unworked. From July, employers must also pay 10% towards the hours their staff cannot work in that month, rising to 20% in August and September. Alterations to the scheme’s eligibility have also been confirmed. From 1st May 2021, employers can claim for anyone employed on 2nd March 2021, providing proof of PAYE RTI submissions exist between 20th March 2020 and 2nd March 2021.
The Chancellor reiterated that the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loans will soon be phased out, with the closing deadline for applications set for 31st March 2021. A new Recovery Loan Scheme (RLS) is to operate in their place, allowing UK firms of any size to apply for finance or extended overdrafts from £25,000 up to a maximum of £10 million. The RLS will also enable businesses to raise invoice and asset finance worth between £1,000 and £10 million.
Finally, companies looking to invest and grow their business during the post-pandemic recovery can avail themselves of the new experimental ‘Super Deduction’ tax relief. Limited companies will be able to claim increased tax relief on eligible capital expenditure such as machinery and plant. The window of eligibility opens from 1st April 2021 and runs until 31st March 2023. A new ‘Super Deduction’ relief of 130% will be applicable, compared with the 18% main rate for writing down allowances. This means firms will get a reduction of 24.70p for every £1 invested.
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