Budget: Impact for business owners

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The expected rise in corporation tax came, but with some crucial caveats that protect our small businesses, so the 25% corporation tax bill won’t apply straight away. We can wait until 2023 before the introduction. But more crucially those with profits under £50,000 will continue to pay corporation tax at 19%, with those having profits of £50,000- £250,000 these will be tapered, so only businesses with profits in excess of £250,000 will pay the higher rate from 2023.

We saw jobs, and incomes protected via the extension of furlough until September, and certainty over when employers will have to make their contributions (from July, starting at 10%, and August and September 20%). For those that are self-employed, there are a further two grants available, both of these now available to those self-employed individuals who missed out last time, but have filed a tax return for 2019/20. These grants relate to 80% of average profits over a three month period, but the final fifth grant is capped if you’re turnover hasn’t fallen more than 30%.

Rishi announced the restart grant in April which will help businesses to reopen and get going again, with up to £18,000 for the hospitality leisure, personal care and gyms, and up to £6,000 for non-essential retail. Given that lending is likely to be required, and the Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS) are also coming to an end at the end of March. They are now introducing a new recovery loan scheme, with a government guarantee of 80% for any sized businesses from £25,000 – £10,000,000.

There are some welcome new reliefs with the restart grant, mortgage guarantees to get our generation of rent to generation of own, some more flexibility over utilising losses, a super deduction for buying equipment (in connection with innovation – watch this space for more information) which will allow every £100 you spend on equipment to get you tax relief of £130, and some new interesting concepts and initiative such as the Freeports and Help to Grow Scheme.

And an extension to the reduced VAT rate for certain industries, the stamp duty extension, a freeze on further rates increasing for VAT, Capital Gains etc this will hopefully provide a little more certainty for helping business owners to plan.

Overall a fair budget although appreciate that some remain excluded.

What does this mean for me as a business owner?

If you have employees, furlough is still available to you and you can get planning with when you need to start making contributions.

So we have Furlough until the end of September and employers will need to make contributions in line with the following:

  • 10% in July
  • 20% in August and September

If you’re not set up as a Limited Company and are a Sole Trader.

Rishi has also extended the support for those self employer, through the SEIS grant with his Fourth grant 80% of average profits for a 3 month period. But with an additional 5th Grant available in late July which will represent a percentage of average profits depending on the level turnover has fallen:

  • Those that turnover has fallen more than 30% – full 80%
  • If less than 30% – then they’ll receive 30%

The great news here is that these Fourth and Fifth grants are now available to newly self employed individuals who previously missed out. As long as you filed your 2019/20 tax return by midnight last night.

For those that are still struggling financially:

  • Universal Credit uplift is to stay for a further 6 months to the end of September
  • Working tax credits with equivalent support plus in instances a one of payment £500


Rishi emphasised his second section of protecting businesses, so how is this relevant for you?

Grants

If you’re a business in non-essential retail, hospitality, leisure, personal care or gyms read on:

Rishi announced the new restart grant to begin in April. To enable businesses to reopen and get going again:

  • non-essential retail businesses up to £6,000 per premises,
  • hospitality and leisure, personal care and gyms so they will receive grants up to £18,000 per premises.

Business rates

Do you pay business rates?

Business rates holiday of 100% will until the June. Business rates will still be discounted up to 2/3rd for the rest of the year after this date.

VAT

Are you in one of the industries that has been able to take advantage of the reduced rate of VAT? Well it’s here to stay for a little longer. Read on.

5% reduced rate of VAT will be extended until 30 September. Even then, we won’t go straight back to 20%, an interim rate of 12.5% for another 6 months, April 2022 return to 20%

Loans

Have you got a Bounce Back Loan, have you been looking at finances? Are you worried about whether you can make cash meet?

The Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS) are coming to an end at the end of March. They are now introducing a new recovery loan scheme, which will enable businesses of any size to get a loan from £25,000 up to £10million through to the end of this year, with a government guarantee of 80%.

Stamp Duty

Were you looking at buying a house and worried that it won’t transfer before the end of 31 March, well this has been extended a little longer too.

The generous £500,000 Nil rate band will not end on the 31 March, instead it will be moved to the end 30 June. Then there will be a reduced Nil rate band of £250,000 until the end of September. Before getting back to the previous level of £150,000 from 1 October.

Mortgage Guarantee

Are you looking to get on to the property market, well this one might help you.

To get the generation of rent, to the generation of own, the government have gone step further with the mortgage guaranteed mortgage for those who can only afford a 5% deposit. Several of the main street lenders Lloyds, NatWest, Santander, offering from next month, and others such as Virgin money to follow afterwards.

So how are we going to pay for it all?

So, in came Rishi’s honesty is the best policy insert, and he confirmed what would need to happen to enable us to start reducing the borrowings that have been accumulated and expected to accumulate.

To make it simple, most things have been kept frozen, including Income Tax rates, National Insurance and VAT. Personal Tax Income tax thresholds and allowances have remained static for this year with known enhancements next year.

The main thing of change is the corporation tax rate rising to 25% only relevant for those who have profits chargeable to tax over £250,000 from 2023. For those who have profits of less than £50,000 the same rate of corporation tax will apply at 19%, with a tapered amount in between that.

What things could help me out?

Well there has been the introduction of a few new areas, super deduction, will mean for the next two years that if you spend money to invest in equipment they can reduce their tax bill by 130% of the cost of the equipment, say £10,000 now a £13,000 directly relief.

If you have made losses, its worth now looking at, with Rishi’s announcement of flexibility of losses, there may be the opportunity to carry back losses over three years, which may now open the window to claim some previously paid tax back.

If you’re local and on our doorsteps at East Midlands airport or one of the other 7 lucky spots across the UK, you are now potentially in a Freeport which will have incentives to trade in the area, including tax breaks and special tax rules, so watch this space.

There were loads of other bits too including freezing duties on alcohol and fuel duties, which will definitely help the wallet, but we wanted to bring you the hard hitting bits as to how this may help you as a business owner.  If you want to chat about any of these and wonder how they may impact you, get in touch with our Bev or Emma!

The expected rise in corporation tax came, but with some crucial caveats that protect our small businesses, so the 25% corporation tax bill won’t apply straight away. We can wait until 2023 before the introduction. But more crucially those with profits under £50,000 will continue to pay corporation tax at 19%, with those having profits of £50,000- £250,000 these will be tapered, so only businesses with profits in excess of £250,000 will pay the higher rate from 2023.
We saw jobs, and incomes protected via the extension of furlough until September, and certainty over when employers will have to make their contributions (from July, starting at 10%, and August and September 20%). For those that are self-employed, there are a further two grants available, both of these now available to those self-employed individuals who missed out last time, but have filed a tax return for 2019/20. These grants relate to 80% of average profits over a three month period, but the final fifth grant is capped if you’re turnover hasn’t fallen more than 30%.
Rishi announced the restart grant in April which will help businesses to reopen and get going again, with up to £18,000 for the hospitality leisure, personal care and gyms, and up to £6,000 for non-essential retail. Given that lending is likely to be required, and the Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS) are also coming to an end at the end of March. They are now introducing a new recovery loan scheme, with a government guarantee of 80% for any sized businesses from £25,000 – £10,000,000.
There are some welcome new reliefs with the restart grant, mortgage guarantees to get our generation of rent to generation of own, some more flexibility over utilising losses, a super deduction for buying equipment (in connection with innovation – watch this space for more information) which will allow every £100 you spend on equipment to get you tax relief of £130, and some new interesting concepts and initiative such as the Freeports and Help to Grow Scheme.
And an extension to the reduced VAT rate for certain industries, the stamp duty extension, a freeze on further rates increasing for VAT, Capital Gains etc this will hopefully provide a little more certainty for helping business owners to plan.
Overall a fair budget although appreciate that some remain excluded.
What does this mean for me as a business owner?
If you have employees, furlough is still available to you and you can get planning with when you need to start making contributions.
So we have Furlough until the end of September and employers will need to make contributions in line with the following:

  • 10% in July
  • 20% in August and September

If you’re not set up as a Limited Company and are a Sole Trader.
Rishi has also extended the support for those self employer, through the SEIS grant with his Fourth grant 80% of average profits for a 3 month period. But with an additional 5th Grant available in late July which will represent a percentage of average profits depending on the level turnover has fallen:

  • Those that turnover has fallen more than 30% – full 80%
  • If less than 30% – then they’ll receive 30%

The great news here is that these Fourth and Fifth grants are now available to newly self employed individuals who previously missed out. As long as you filed your 2019/20 tax return by midnight last night.
For those that are still struggling financially:

  • Universal Credit uplift is to stay for a further 6 months to the end of September
  • Working tax credits with equivalent support plus in instances a one of payment £500


Rishi emphasised his second section of protecting businesses, so how is this relevant for you?

Grants
If you’re a business in non-essential retail, hospitality, leisure, personal care or gyms read on:
Rishi announced the new restart grant to begin in April. To enable businesses to reopen and get going again:

  • non-essential retail businesses up to £6,000 per premises,
  • hospitality and leisure, personal care and gyms so they will receive grants up to £18,000 per premises.

Business rates
Do you pay business rates?
Business rates holiday of 100% will until the June. Business rates will still be discounted up to 2/3rd for the rest of the year after this date.
VAT
Are you in one of the industries that has been able to take advantage of the reduced rate of VAT? Well it’s here to stay for a little longer. Read on.
5% reduced rate of VAT will be extended until 30 September. Even then, we won’t go straight back to 20%, an interim rate of 12.5% for another 6 months, April 2022 return to 20%
Loans
Have you got a Bounce Back Loan, have you been looking at finances? Are you worried about whether you can make cash meet?
The Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS) are coming to an end at the end of March. They are now introducing a new recovery loan scheme, which will enable businesses of any size to get a loan from £25,000 up to £10million through to the end of this year, with a government guarantee of 80%.
Stamp Duty
Were you looking at buying a house and worried that it won’t transfer before the end of 31 March, well this has been extended a little longer too.
The generous £500,000 Nil rate band will not end on the 31 March, instead it will be moved to the end 30 June. Then there will be a reduced Nil rate band of £250,000 until the end of September. Before getting back to the previous level of £150,000 from 1 October.
Mortgage Guarantee
Are you looking to get on to the property market, well this one might help you.
To get the generation of rent, to the generation of own, the government have gone step further with the mortgage guaranteed mortgage for those who can only afford a 5% deposit. Several of the main street lenders Lloyds, NatWest, Santander, offering from next month, and others such as Virgin money to follow afterwards.
So how are we going to pay for it all?
So, in came Rishi’s honesty is the best policy insert, and he confirmed what would need to happen to enable us to start reducing the borrowings that have been accumulated and expected to accumulate.
To make it simple, most things have been kept frozen, including Income Tax rates, National Insurance and VAT. Personal Tax Income tax thresholds and allowances have remained static for this year with known enhancements next year.
The main thing of change is the corporation tax rate rising to 25% only relevant for those who have profits chargeable to tax over £250,000 from 2023. For those who have profits of less than £50,000 the same rate of corporation tax will apply at 19%, with a tapered amount in between that.
What things could help me out?
Well there has been the introduction of a few new areas, super deduction, will mean for the next two years that if you spend money to invest in equipment they can reduce their tax bill by 130% of the cost of the equipment, say £10,000 now a £13,000 directly relief.
If you have made losses, its worth now looking at, with Rishi’s announcement of flexibility of losses, there may be the opportunity to carry back losses over three years, which may now open the window to claim some previously paid tax back.
If you’re local and on our doorsteps at East Midlands airport or one of the other 7 lucky spots across the UK, you are now potentially in a Freeport which will have incentives to trade in the area, including tax breaks and special tax rules, so watch this space.
There were loads of other bits too including freezing duties on alcohol and fuel duties, which will definitely help the wallet, but we wanted to bring you the hard hitting bits as to how this may help you as a business owner.  If you want to chat about any of these and wonder how they may impact you, get in touch with our Bev or Emma!

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