Budget 2021 at a glance: what small businesses need to know

As anticipated, Rishi Sunak’s budget on 3 March 2021 was focused on protecting jobs and livelihoods, with a focus on extending and opening further access to COVID-19 support measures. This was a required move by the Government, particularly with lockdown restrictions prevailing until 21 June at the earliest.

The Chancellor also took the opportunity to set out a strategy for paying back the capital borrowed to get the country through COVID, as well as announcing further investment into workforce training and development.

James Foster, Senior Commercial Manager at SJD Accountancy, has detailed what small businesses need to know in light of the announcements.

Extension of CJRS and SEISS

In a move widely expected, the Government extended the CJRS until 30 September, with the full 80% being available to workers. Businesses who choose to furlough staff will be expected to contribute 10 per cent towards employees’ wages in July, and 20 per cent in August and September. Small businesses must factor in this cost, as well as the National Insurance contributions and pension they are already responsible for when deciding whether to furlough staff.

The SEISS scheme has also been extended until 30 September. The fourth grant, covering February, March and April, has the same eligibility criteria as previous ones, but the fifth grant, covering May to September, comes with tighter restrictions. People whose turnover has fallen by 30 per cent or more can access the full grant worth 80% of three months’ average trading profits, capped at £7,500. However, those whose turnover has fallen by less than 30 per cent will receive just a 30 per cent grant, capped at £2,850.

The grant now covers 2019-20 tax returns, meaning newly self-employed people will be eligible.

Business Rates Holiday

The Chancellor announced that the business rates holiday, due to end in March, would be extended until 30 June. This support is aimed at retail, hospitality and leisure businesses that have been hardest hit by the pandemic thanks to closures of high streets, retail parks and shopping centres.

For the remaining nine months of the tax year, business rates will still be discounted by two-thirds, up to a value of £2million for closed businesses, with a lower cap for those who have been able to stay open during lockdowns for essential work.

Apprenticeships

The training and development of workforces was another key theme to emerge from the budget, with the Chancellor offering incentives for hiring apprentices.

The government will extend and increase the payments made to employers in England who hire new apprentices between 1 April 2021 and 30 September 2021. Businesses will now receive £3,000 per new hire, compared with £1,500 (or £2,000 for those aged 24 and under) under the previous scheme.

Sunak also announced an additional £126million in England for work placements and training for 16-24-year-olds in the 2021/22 academic year. Businesses that provide work experience will continue to receive £1,000 per trainee. 

Help to Grow training scheme

Two new Help to Grow training schemes were announced:

• Help to Grow – Management: A new UK-wide management programme for 30,000 SMEs over three years. It will be delivered through business schools with mentoring from professionals and will run over 12 weeks with 90 per cent of the costs subsidised by the government.
• Help to Grow – Digital: Another UK-wide scheme launching in autumn to help 100,000 SMEs use software to improve their productivity. A voucher covering up to half of the costs of approved software up to a maximum of £5,000, will be available

Recovery Loan Scheme

Once Bounce Back Loans and the Coronavirus Business Interruption Loan Scheme close, a new Recovery Loan Scheme will be introduced. From 6 April 2021, businesses will be able to apply for loans between £25,000 and £10m and invoice finance between £1,000 and £10m. The government will provide an 80 per cent guarantee to lenders.

Freeze in personal allowance threshold

‘Stealth taxes’ have been long rumoured, and the government has now confirmed it will freeze rises in thresholds until 2026 once the planned rise for this year has gone ahead. Rates will be frozen at £12,570 for basic tax-payers and £50,270 for higher earners.

Corporation Tax

Corporation tax will increase to 25 per cent, but not until 2023 and small businesses with a profit of £50,000 or less will continue to pay the current rate of 19 per cent. The rate also increases in line with a businesses’ profits, so only those with a profit of £250,000 and above will be taxed at the highest rate.

For more information on the specifics of the budget, visit the official Government website.

More on small business news and small business tax rates.