Budget 2021: What does it mean for small business?
We’ve pulled together the headlines that affect the self-employed, sole traders and small business from this week’s Budget.
“Spend now, pay later: Sunak flags major tax rises as Covid bill soars! Highest tax levels for 50 years!”
There have been few Budgets like this. Rishi Sunak's second as Chancellor of the Exchequer is also his second to respond to the COVID-19 pandemic. But a year on, it needed a strong emphasis on recovery. The headlines have centred on the bills to come.
While the 2020 Budget was designed to respond to the 'delaying' the pandemic’s rise, we’re still experiencing the impact of successive lockdowns. Against the backdrop of a hugely successful vaccine rollout in the UK, the Budget had to clarify existing measures and highlight what comes next.
The chancellor commenced his Budget by spelling out the extraordinary impact of the last 12 months, from the increasing economic hit to the ongoing threat to jobs and livelihoods across the UK. In doing “whatever it takes”, how is the Chancellor supporting small business owners and the self-employed in the UK?
Extensions for the self-employed
- Furlough has been extended until the end of September, under the same terms for employees. The government will continue to pay 80% of their wage for hours not worked. However, businesses will be asked to contribute 10% in July and 20% in August and September.
- The Self-Employed Income Support Scheme is also extending to September. The fourth grant covering February to April (80% of average trading profits, up to £7,500) will be joined by a fifth grant covering May to September. This will open in late July.
- Access to the grants is widened: 600,000 more self-employed people will be eligible as long as they filed a tax return for 2019-20.
- Restart grants will provide a one-off grant to businesses from April. Non-essential retailers who are reopening first will be able to claim up to £6,000 per premises. Other high street and leisure businesses opening later, and therefore more heavily impacted or offering close-contact services, will be provided grants up to £18,000. The industries covered include:
- Personal Care
- The UK-wide Recovery Loan Scheme will replace Bounceback Loans. Loans of between £25,001 and £10 million, asset and invoice finance, will be available to businesses of all sizes. The government will provide an 80% guarantee to all lenders.
- Help to Grow Management will support business leadership training from business schools across the UK, with the government contributing 90% of the cost.
- Help to Grow Digital will provide free expert training on digital to businesses and 50% discounts on productivity software. You can sign up for both Help to Grow initiatives at https://helptogrow.campaign.gov.uk/
- The VAT cut to 5% will be extended to September for hospitality, accommodation and attractions. It will then rise to 12.5% until March 2022.
- Business rate relief will benefit 750,000 qualifying businesses in the retail, hospitality and leisure sectors.
- Small and medium-sized businesses will still to be able to reclaim up to two weeks of eligible statutory sick pay from the Government for each employee.
- The VAT threshold for taxable turnover will remain at £85,000 until 31 March 2024
- Cash incentives will be raised for employers who take on apprentices are to be raised to £3,000.
- The £500m insurance scheme protecting film and TV productions in the UK against the cost of Covid shutdowns is extended from April to the end of the year.
- The Business rate relief is extended in England until the end of Junethe additional three months will mean 750,000 retail, hospitality and leisure properties are eligible to pay no business rates when combined with Small Business Rates Relief. Further relief will be available for the remainder of the year.
- The personal allowance will rise to £12,570 in April as planned and remain frozen until April 2026.
How has this budget affected you? Let us know.
Full details on the support packages and every aspect of Budget 2021 can be found in HM Treasury’s full policy paper.
And you can open a business account with all the support you need in minutes.