The Budget

How the budget affects you, your family and your business

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Chartered Accountants & Tax Advisers

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The Chancellor Rishi Sunak presented his second Budget on Wednesday 3 March 2021. In his speech he stated his Budget ‘meets the moment with a three-part plan to protect the jobs and livelihoods of the British people’. As always, we have put together a summary of the proposals along with analysis and tips on how these affect you.

The main proposals

  • Tax measures:
    • a super-deduction for companies investing in new plant and machinery
    • a time extension of the temporary increase to the SDLT nil rate band for residential property in England and Northern Ireland
    • an extension to the temporary 5% reduced rate of VAT for certain supplies
    • a temporary increase in the carry-back period for business losses
    • an increased rate of corporation tax from 2023
  • Other measures:
    • a new mortgage guarantee scheme
    • extension to the Job Retention Scheme
    • a Self-Employment Income Support Scheme fourth and fifth grant
    • an extension to the business rates holiday in England
  • Previously announced measures:
    • a cap on the amount of R&D tax credit paid to a loss-making small or medium-sized enterprise
    • new rules apply to off-payroll working payments made for services provided on or after 6 April 2021

Some Budget proposals may be subject to amendment in the 2021 Finance Act. You should contact us before taking any action as a result of the contents of this summary.

In focus

Stamp Duty Land Tax
As predicted the Stamp Duty Land Tax (“SDLT”) holiday has been extended to 30 June 2021. This means that purchasers have an additional three months to complete on their purchases. The Government have also increased the nil rate band from 1 July 2021 to 30 September 20201 to £250,000 before it returns to £125,000 on 1 October 2021.  View the SDLT rates for 2021.

VAT & Indirect taxes
Ruth Corkin summarises the proposals for VAT & Indirect Tax. Read more.

From the archives

September 2020 – Winter Economy plan

As COVID-19 continues to cause disruption to our lives and businesses, Rishi has announced further support today with aim of protecting jobs and helping cash strapped businesses. Here is a brief summary of the announcements and you can find more detail on all of the support packages below in a series of help sheets on our Guide to support page.

  • Job support scheme –  This will replace the Coronavirus Job Retention Scheme which comes to an end next month. It can be used to top up wages of staff whose working hours need to be reduced because of reduced demand or restrictions to trading. The Government will subsidise employees’ wages up to a maximum of 22% (capped at £697.92 per month) for 6 months. To qualify, employees would need to be working at least 33% of their normal hours.
  • VAT cut extended – The 15% VAT cut for hospitality and tourism industries has been extended until 31st March 2021.
  • VAT deferral repayment extended If you deferred your VAT payments earlier this year and were concerned about the impact the repayment would have on your cashflow come March 2021, you can now spread the repayments over 11 months interest free.
  • Help for Self-Assessment taxpayers – You can now extend your tax bill over 12 months from 31 January 2021.
  • Flexible repayments for support loans – Application deadlines for CBILS and Bounce Back Loans have been extended to the 30th November 2020. The government has also announced changes to repayment terms to help cashflow.
  • Self Employment Income Support Scheme extended – This scheme has now been extended until 30 April 2021 with further grants of 20% of average monthly profits available.

July 2020 – Summer Economic update

On 8th July the Chancellor Rishi Sunak announced some new measures aimed at helping the country’s economic recovery.

  • Stamp Duty Land Tax (SDLT) holiday – A temporary Stamp Duty Land Tax (“SDLT”) holiday was announced. It started immediately covering the period from 8 July 2020 until 31 March 2021 inclusive. Read more.
  • Bonus for retaining furloughed workers – Following a seemingly endless stream of redundancy warnings in recent weeks, The Chancellor today announced an incentive for com to bring employees back from furlough rather than make them redundant. Read more.
  • VAT reduced from 20% to 5% for the hospitality sector – The Chancellor has announced that VAT will be reduced from 20% to 5% on: Accommodation (which includes hotels, B&Bs, camp and caravan sites), food from cafes, bars, pubs, restaurants (including hot takeaways), and attractions (including cinemas, theme parks and zoos). This will be effective for 6 months and ends on 12th January 2021 (as of 24th September the Chancellor announced an extension on the VAT cut to 31 March 2021). Read more.

March 2020 the COVID-19 Budget – Download our 2020 Budget summary

Government pledges £30bn to support UK through Coronavirus including these temporary measures for businesses:

  • For companies with less than 250 employees, the government will refund Statutory Sick Pay costs for up to 14 days.
  • HMRC will defer tax payments for business and self-employed – and 2000 extra staff for their “time to pay” helpline.
  • New temporary coronavirus business interruption loans of up to £1.2m for small businesses – government will guarantee of 80% of the loan
  • Retail, leisure or hospitality businesses with a rateable value of below £51K, will pay no business rates for the next 12 months
  • A review of the long term future of business rates will be launched
  • Providing small business that qualify for small business rate relief will have access to a £3000 cash grant per business.

Taxation announcements:

  • Reduction in lifetime limit of entrepreneurs relief from £10m – £1m.
  • R&D expenditure credit increased from 12%-13%. (This is for R&D RDEC claims)
  • Structures and buildings allowance increased from 2% – 3%
  • Increase employment allowance to £4000
  • Businesses who qualify under the small business rates relief are now eligible for a £3k grant from the Government
  • From 1 April 2021 a new non-UK resident SDLT 2% surcharge is being introduced for purchasers of residential property in England and Northern Ireland.

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