Chancellor Rishi Sunak promised to do “whatever it takes” and confirmed that the furlough scheme would be extended until September 2021 to support jobs through the pandemic.
The Self-Employment Income Support Scheme (SEISS) has been extended, as expected, with two further grants this year. The newly self-employed from 6 April 2019 can now claim, provided they filed their 2020 tax return by 2 March 2021.
Restart grants will be available. Non-essential retail businesses will be eligible for up to £6,000. The leisure and hospitality sectors, which have been worse affected and will re-open later, will be eligible for up to £18,000.
The other highlights are:
- Personal allowance frozen at £12,570 for 4 years
- Basic and higher rate income tax thresholds frozen at £37,700 and £50,270 for 4 years.
- Pensions lifetime allowance frozen at £1,073,100 for 4 years.
- Small profits corporation tax rate of 19% to be introduced in April 2023
- The main rate of corporation tax will increase to 25% in April 2023
- A 130% 'super deduction' will be introduced for capital investments in qualifying new plant and machinery
- Trading losses can temporarily be carried back for three years.
- CGT annual exempt amount of £12,300 for individuals frozen for 4 years.
- IHT nil-rate band and residence nil-rate band frozen at £325,000 and £175,000 respectively, until 5 April 2026.
- Reliefs for home office expenses, COVID tests and cycle exemptions
- Time limits Enterprise Management Incentive schemes amended to ensure furloughed workers not excluded
- IR35 off-payroll working rules confirmed from 6 April 2021 but no penalties for inaccuracies in the first 12 months of the regime, unless there is evidence of deliberate non-compliance.
VAT AND INDIRECT TAX
- Temporary 5% VAT rate for hospitality and tourism businesses will be extended by six months, followed by a 12.5% rate for six months.
- VAT registration threshold frozen at £85,000 until 31 March 2024.
- The Scottish government has confirmed it is not going to match the stamp duty land tax holiday in England and Wales.
There are therefore no knee-jerk tax increases for smaller businesses but the freeze in rates and allowances is effectively a stealth increase in the amounts that everyone will pay.
“In order to reveal to all eyes what he was made of, I wanted to break open the handsome wax-figure I presented everywhere.”
― Albert Camus, The Fall