12 Ways the Budget 2021 Will Affect You?

Rishi Sunak, the Chancellor of the Exchequer, delivered his 2021 budget after a year of economic turmoil as the UK continues to deal with the impact of the coronavirus pandemic. He introduced a range of measures to rebuild the economy as it establishes itself outside the EU following the end of the Brexit transition period.

Rishi Sunak focused in the budget speech to kickstart economic recovery and protect jobs while repairing the public finances. He announced to raise corporation tax, extend the stamp duty holiday, and declared government grants to support both individuals and businesses. He recognised that it would take time for growth and to bounce back after the lockdown restrictions were lifted, however he affirmed that he is ready to go the distance to help the economy recover.

We at DNS Accountants took a deep-dive in the budget speech and announcements that came after that, to formulate 12 ways in which Budget 2021 is going to affect you. Continue reading to know how and what you can do to alleviate upcoming changes.

1. Support for Businesses:

   The Chancellor provided an extension to the 5% reduced VAT rate for businesses operating in the tourism, accommodation and hospitality sector with a 12.5% rate, applying for another 6 months. He further dispensed a temporary extension of the loss carry back period for companies from 12 to 36 months for the businesses involved in research and development via R&D tax reliefs.

2. Job Retention Scheme:

   The Coronavirus Job Retention Scheme (CJRS) has been extended to the end of September 2021. Earlier, it was due to end in April 2021. Employees will continue to receive 80% of their current salary, capped at £2,500 per month, for hours not worked. In addition, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September.

3. Universal Credit Boost:

   An increase of £20 a week, first introduced in April 2020 has been extended by a further six months. So the people who claim Universal Credit will be eligible for the increased amount until the end of September.

4. Corporation Tax:

   Smaller businesses will continue paying the lower rate. Only those making £250,000 or more in profit will pay a higher rate that will be subsided from 19 per cent to 23 per cent. Moreover, in April 2023, the rate companies pay on their profits will rise from 19 to 25 per cent.

5. Self-employed:

   The chancellor also announced a fourth and fifth Self-Employment Income Support Scheme (SEISS) grant would be available. The fourth grant will cover February, March and April at a rate of 80% of previous trading profits. Those whose income has been less affected can apply for a grant of 30 per cent.

6. Support for Homebuyers:

   Rishi Sunak notified that the government will introduce a mortgage guarantee scheme designed to help homebuyers with small deposit payments. This scheme will enable first-time buyers to purchase a property with only a 5% down payment on the deposit of the house; government guarantees will cover the rest 95% to lenders which offer mortgages.

7. Recovery Loan Scheme:

   The government, through Recovery Loan Scheme, will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme is open to all businesses, including those who have already received support under various other schemes.

8. Personal Allowances:

   Most workers will pay income tax at the same rate as they do currently. The Treasury will restrict the basic and higher income tax rates at £12,500 and £50,000 for at least three years.

9. Capital Expenditure Reliefs:

   This will apply to capital expenditure on plant and machinery incurred by companies between 1 April 2021 and 31 March 2023. For reference, if a company spends £1,000 on qualifying items of plant and machinery, it can deduct £1,000 from taxable profits.

10. Extension of Stamp Duty Land Tax (SDLT) relief:

    The nil rate band will continue to be 500,000 for the period to 30 June 2021. From 1 July 2021 until 30 September 2021, the nil rate band will reduce to £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021.

11. Support for Young People:

    Incentive grants for apprenticeships are set to rise to £3,000 and £126 million for traineeships for young professionals looking to retrain.

12. COVID-19 related Home Office Expenses:

    The government will extend the temporary income tax, and Class 1 National Insurance contributions exemptions for employer reimbursed expenses covering the cost of appropriate home office equipment.

The chancellor also announced an extra £19 million towards domestic violence programmes and £10 million to help Armed Forces veterans with their mental health needs.

To get a free consultation on how to deal with Budget 2021 announcements and any other accounting, taxation, and financial advice or support, please write to us at
enquiry@dnsaccountants.co.uk, call us on 3300 88 66 86, or visit www.dnsaccountants.co.uk.

Also See: Budget 2021 Conclusion

Also See: The Budget 2021 - An Overview

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