The 2021 Budget

International Association of Bookkeepers

The 2021 Budget

This week saw the Chancellor, Rishi Sunak, deliver the 2021 Budget, it was one of the most anticipated Budget for years. I’ve summarised the key points;

CJRS (furlough scheme)
The furlough scheme has been extended and will run until the end of September; it had been due to close at the end of April but will now be phased out in a similar way to what we saw last year with the tapering. Employees will continue to receive 80% percent of their salary, capped at £2500. In July employers will need to contribute 10% of wages, and the capped amount will reduce to £2187.50. This will increase to 20% contribution in August and September and capped at £1875. Employers will continue to pay for the associated Employer National Insurance and pension contributions throughout.  Note: the eligibly criteria will change from 1st May to include those employed between the 20 March 2020 and 2nd March 2021.

Self-Employment Income Support Scheme (SEISS)
A fourth grant will be available from April (covering February, March & April). Those eligible can claim 80% of average monthly profits capped at £2.5k, provided their business had a new or continuing impact from the pandemic.

A fifth grant has also been confirmed to cover May to July however, the full 80% grant will only be available to people whose turnover has fallen by 30% or more. It is expected that claims may be made from late July.

Grants now allow 18/19 and 19/20 Self Assessments as evidence of earnings.

VAT reduction for the UK’s tourism and hospitality sector
The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30‌‌‌th ‌September 2021. Then from 1st October to 31st March 2022 a 12.5% rate will apply until returning to 20%.

Business Rates
The 100% business rates holiday in England will also continue from 1stApril until 30th June.

KickStart Scheme
This scheme has been given an additional boost with the apprenticeship bonus doubled to £3000 for every new apprentice hired between 1st April and 30th September 2021.

 Restart Grant
A new restart grant will start in April. These will be available in England and will be worth up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.

Recovery Loan Scheme
A new Recovery Loan Scheme will launch on 6th April and will be open to all businesses, including those who have already received support under the existing coronavirus guaranteed loan schemes. It will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million.

Personal Allowance and higher rate threshold (HRT)
The income tax Personal Allowance will rise as planned to £12,570 from April‌‌‌ ‌2021 and will remain at this level until April 2026. The income tax at the higher rate threshold will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026.

National Minimum Wage (NMW)
The NMW is due to increase to £8.91 from 6th April.

Universal Credit
The Universal Credit uplift of £20 per week will continue for a further six months. In addition, working tax credit claimants will get equivalent support for a further six months.

Corporation tax
The rate of Corporation Tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.

In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April‌‌‌ ‌2023 so that it remains an effective deterrent against diverting profits out of the UK.

Stamp Duty Land Tax (SDLT)
The current stamp duty holiday (in England and NI) will be extended until the end of June. The £500,000 nil rate band had been due to end on 31st March but will now continue until the end of June. Then from the 1st July to 30th September the nil rate band will be reduced to £250,000, before returning to the usual £125,000.

Mortgages
A new mortgage scheme to help buyers with a low deposit will be launched. It will start from April and many major lenders say they will offer the 5% rates.

Contactless Payment Limit
The contactless payment limit will rise to £100. That is up from £45 and officially took effect on Wednesday though in practice it may take longer for retailers to implement the increased limit.

Duty
Alcohol and fuel duty will be frozen. This is the second year in a row that alcohol duty has been frozen, whilst fuel duty has been frozen for over a decade.

Summary
The chancellor acknowledged that the amount the government has borrowed is matched only by the borrowing in the two world wars. In total the amount of fiscal support the government has given since the start of the pandemic comes in at 407 billion pounds. That will have to be paid for with tax rises but for now it seems his focus is on helping the economy to recover.

 

Listen on Spotify here

Moving towards a cashless society

The move to a cashless society has been intensified by the pandemic, with a quarter of Brits (26%) saying they would favour a cashless society. This ranks the UK 14th in a recent poll conducted by MoneyTansfers.com.

Interestingly, India was the country most willing to go cashless, with 79% of respondents here saying they believe this would have a positive impact on their country. In second place was Malaysia, where 65% of those surveyed said they supported the move to a cashless society.

This news comes as experts have warned that half of the UK’s cash machines could close within two years, unless the banks are forced by regulators to support them.

Cyber thieves go in for ‘silent stealing’ during pandemic

The shift to working from home has seen a rise in cyber criminals targeting people’s personal bank accounts, sometimes conning them out of as little as £10 a time. This is then multiplied thousands of times, and is known as “silent stealing”.

A Royal United Services Institute (RUSI) report explained the thieves are going ‘downmarket’ to make their money. The RUSI said that individual victims are less likely to report the loss of a small sum of money. For the police and banks, this makes it difficult to understand the sheer size of the scam.

The report said: “There’s a working hypothesis that criminals are going downmarket. Are you going to call Action Fraud or your bank in a case where you lose £10?”

Companies House resumes strike off services

International Association of Bookkeepers

Companies House has now resumed its strike off processes (from 8 March). It temporarily paused the service on 21 January 2021 so that companies and creditors would not be adversely affected by processing delays.

It has now resumed the process to dissolve companies that have applied for voluntary strike off, and those Companies House believes are no longer carrying on business or are in operation. Continue reading “Companies House resumes strike off services”

Pay in 30 days and working with Alan Sugar

Tony Robinson OBE International Association of Bookkeepers

In this episode I’m interviewing Tony Robinson OBE about his multitude of business campaigns to help the small business owner and what it was like to work with Alan Sugar.

I ask him
Why he started the PayIn30Days Campaign
The #MicroBizMatters Day and Movement
What is was like to work with Sir Alan Sugar
Being awarded his OBE

And my final questions were to tell me something that not many people know about you. And if he was leaving the planet what would his last message be.

You can find Tony on his website here 

Listen on Spotify here

The 2021 Budget by Janet Jack

The 2021 Budget – International Association of Bookkeepers - Bookkeeping Qualifications, Bookkeeping Study, Bookkeeping Careers, Payroll, Bookkeeping Exams, Bookkeeping Support, Find A Bookkeeper, Bookkeeping in Business, Money Laundering Supervision, AML Supervision, MLR.

 

Chancellor sets out steps to fix economy in Budget

The Chancellor Rishi Sunak has delivered his second budget with a pledge to do whatever it takes to fix the economy.
He announced that millions of people across the UK will continue to be supported through the next stage of the pandemic with an extension of the government’s furlough scheme. Employees will continue to receive 80 percent of their salary until the end of September. Employers will have to pay 10% of staff wages in July and 20% in August and September.

Mr Sunak confirmed that he is set to extend the Coronavirus Job Retention Scheme (CJRS)– which has protected 11.2 million jobs since the start of the pandemic until the end of September.
As the tax return deadline has now passed, he announced that more than 600,000 people, including the newly self-employed in 2019-20, will now be eligible for government support with a 4th grant covering February to April, and a 5th grant from May.
Mr Sunak also doubled the apprenticeship bonus to £3000 for every new apprentice hired between 1 April and 30 September 2021.

There was further support for businesses too, with new Restart Grants to help them reopen. The “restart grants” of up to £18,000 will be available to shops, leisure and hospitality businesses in England. There will also be grants of £6000 for non-essential retailers.

There were announcements on VAT too with the 5 percent reduced rate of VAT for hospitality and leisure businesses extended for six months to 30th September. It will then revert to an interim rate of 12.5 percent for another six months before returning to the standard rate of 20 percent until April 2022.

The 100% business rates holiday in England will also continue from April until June.

Mr Sunak also confirmed the three-month extension to the stamp duty holiday until the end of June.

He said the amount the government has borrowed is matched only by the borrowing in the two world wars. In total the amount of fiscal support the government has given since the start of the pandemic comes in at 407 billion pounds.

That will have to be paid for with tax rises – some of which were laid out today. The threshold for paying the basic rate of income tax will rise to £12,570 next year.
For higher-rate payers, the threshold will be £50,270. Both rates will stay the same until 2026. Further, the VAT registration threshold will remain at £85,000 until 2024.

in 2023 he will raise corporation tax to 25 percent – up from 19 percent. He also announced that, to boost investment, there will be a “super deduction” in tax for companies that invest in innovation. However, he also announced a Small Profits Rate of 19 percent for businesses with a profit of under £50,000.

It’s hoped these measures will help the economy to recover and the Office for Budget Responsibility suggests the economy will be back to something like ‘normal’ by the middle of next year, but in the longer term, it will be 3 percent smaller than it was prior to the pandemic.

Mr Sunak admitted it will be the work of “many governments” over many years to pay back the debt taken on during the pandemic.