4th March 2021
Davenham’s overview of The Spring Budget 2021 Announcement
In his second (and again made in challenging circumstances) Spring Budget, Rishi Sunak came across as strong as positive as he stepped out of his Downing Street residence. Making the headlines was the extended support package for the “damaged economy” to continue responding to the Coronavirus outbreak, and here’s what we at Davenham have picked out as the key points for our network.
Taxes
Whilst no changes have been stated to income tax or national insurance or general VAT rates, details were given of how long some of the current rates will be frozen, including for individuals:
There will also be tax breaks for companies to "unlock" £20 billion worth of business investment where they will be able "deduct" investment costs from tax bills and potentially reducing taxable profits by a whopping 130%. Mr Sunak gave the hypothetical example of a construction company which would buy £10 million worth of equipment and under the existing rules could reduce taxable income by £2.6 million. However, with the “super deduction” it could potentially reduce taxable income by £13 million.
The lower VAT rate for hospitality firms will be kept at 5% until the end of September 2021 after which an interim rate of 12.5% will apply until April 2022.
Finally, the business rates holiday applicable to specific firms in England will continue until June 2021 with a 75% discount after that.
Employment support
As reported on 2nd March 2021, the Furlough scheme will be extended until the end of September 2021 with the Government continuing to pay 80% of employees' wages for hours they cannot work. From July 2021, employers will be asked to contribute 10%, and then 20% in August and September 2021.
Support for the self-employed will also be extended until the end of September 2021 including support for 600,000 more self-employed people who will be eligible for help as the access to grants is widened.
Minimum wage will increase to £8.91 an hour from April 2021 and the Chancellor announced incentives for businesses to take on apprentices with £126m for traineeships.
A new visa scheme will be implemented to help start-ups and rapidly growing tech firms source overseas talent.
Going Green
A new UK Infrastructure Bank will be set up in Leeds with £12 billion in capital, and an aim of funding £40 billion worth of public and private projects including £15 billion in green bonds for retail investors, to help finance the transition to net zero by 2050.
Funding and finance
When the CBILS and the BBLS application deadline ends on 31st March 2021, the Government will introduce a “loan recovery scheme” for businesses to apply for funding with an 80% guarantee to lenders offering loans between £25,000 and £10 million.
A £300m recovery package has been announced for professional sport and £25m for grassroots football.
Keeping on a positive note to end..
Whilst the UK economy shrank by 10% in 2020, Mr Sunak expects the economy to rebound in 2021, with predicted annual growth of 4% this year. Furthermore, the economy is forecast to return to pre-Covid levels by the middle of 2022, with growth of 7.3% expected next year.
If you have any queries or concerns as a result of any of the announced changes that might affect your business, or you as an individual, please call the Davenham Asset Finance team on 0161 832 8484. We can offer alternative finance support by releasing funds from new or existing assets with affordable repayment plans.
Taxes
Whilst no changes have been stated to income tax or national insurance or general VAT rates, details were given of how long some of the current rates will be frozen, including for individuals:
- Tax-free personal allowance to be frozen at £12,570 from April 2021 levels to 2026
- Higher rate income tax threshold to be frozen at £50,270 from April 2021 levels to 2026
- Stamp duty holiday on house purchases in England and Northern Ireland extended to 30th June 2021 with no tax charged on sales of less than £500,000
- Inheritance tax thresholds, pensions life time allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-26.
There will also be tax breaks for companies to "unlock" £20 billion worth of business investment where they will be able "deduct" investment costs from tax bills and potentially reducing taxable profits by a whopping 130%. Mr Sunak gave the hypothetical example of a construction company which would buy £10 million worth of equipment and under the existing rules could reduce taxable income by £2.6 million. However, with the “super deduction” it could potentially reduce taxable income by £13 million.
The lower VAT rate for hospitality firms will be kept at 5% until the end of September 2021 after which an interim rate of 12.5% will apply until April 2022.
Finally, the business rates holiday applicable to specific firms in England will continue until June 2021 with a 75% discount after that.
Employment support
As reported on 2nd March 2021, the Furlough scheme will be extended until the end of September 2021 with the Government continuing to pay 80% of employees' wages for hours they cannot work. From July 2021, employers will be asked to contribute 10%, and then 20% in August and September 2021.
Support for the self-employed will also be extended until the end of September 2021 including support for 600,000 more self-employed people who will be eligible for help as the access to grants is widened.
Minimum wage will increase to £8.91 an hour from April 2021 and the Chancellor announced incentives for businesses to take on apprentices with £126m for traineeships.
A new visa scheme will be implemented to help start-ups and rapidly growing tech firms source overseas talent.
Going Green
A new UK Infrastructure Bank will be set up in Leeds with £12 billion in capital, and an aim of funding £40 billion worth of public and private projects including £15 billion in green bonds for retail investors, to help finance the transition to net zero by 2050.
Funding and finance
When the CBILS and the BBLS application deadline ends on 31st March 2021, the Government will introduce a “loan recovery scheme” for businesses to apply for funding with an 80% guarantee to lenders offering loans between £25,000 and £10 million.
A £300m recovery package has been announced for professional sport and £25m for grassroots football.
Keeping on a positive note to end..
Whilst the UK economy shrank by 10% in 2020, Mr Sunak expects the economy to rebound in 2021, with predicted annual growth of 4% this year. Furthermore, the economy is forecast to return to pre-Covid levels by the middle of 2022, with growth of 7.3% expected next year.
If you have any queries or concerns as a result of any of the announced changes that might affect your business, or you as an individual, please call the Davenham Asset Finance team on 0161 832 8484. We can offer alternative finance support by releasing funds from new or existing assets with affordable repayment plans.