Chancellor Rishi Sunak announced this week his March budget, confirming the extension of the Coronavirus Job Retention Scheme (CJRS) until the end of September as well outlining the government’s tax and spending plans for the upcoming year.
As expected, the furlough scheme will be extended until the end of September, however employers will be required to contribute 10% of furloughed wages in July and 20% in August and September. To help combat fraud, it was announced HMRC will be recruiting an additional 1,265 staff to investigate CJRS fraud and error.
Support to the self-employed will also continue, with 600,000 more self-employed people eligible to access the grant. Those self-employed will receive 80% of their average trading profits, capped at £2,500 per month. The average profit calculation will include four tax years’ worth of profits, from 2016/2017 to 2019/2020. The grant will now be available for those who became self-employed in 2019/2020.
In the final fifth grant, those businesses where turnover has fallen by at least 30% will get the full grant at 80%. Other businesses whose turnover has fallen by less than 30% will receive a grant based on 30% of average profits, capped at £2,850.
Other support measures announced include the extension of the business rate holiday until 30 June 2021. The business rate holiday will then go through a transitional period from July until the end of March 2022.
A £5bn grant scheme to help the high street and hospitality sector was also announced.
In the March budget it was announced that from 1 April 2023 corporation tax will increase to 25%, but companies with profits up to £50,000 will not be affected by the rate increase and a tapered rate will apply to profits up to £250,000.
In VAT news, the temporary rate of VAT for the tourist and hospitality sector will remain at 5% until 30 September 2021. It will then raise to 12.5% until 31 March 2022 when it will then revert back to the normal 20%.
In other VAT news, the VAT threshold of £85,000 will remain in place for at least 3 more years.
Looking at payroll news, the planned increase in personal allowance to £12,570 and the 20% tax band will go ahead, however it will then be frozen until 05 April 2026. It was also confirmed the National Living wage will increase to £8.91 from April. Finally, employment allowance will remain at £4,000 for 2021/2022.
Not sure how any of the above, or any other announcements made this week, affect you or your business? Get in touch to see how we can help with your bookkeeping and payroll needs. Based in Essex, we provide small to medium size businesses bespoke, affordable bookkeeping and payroll services.