With the dust settling on the March 2021 Budget, we round up the key measures affecting SMEs. Many of the newly announced schemes are designed to help small businesses survive the pandemic through loans, grants and tax savings.
The March 2021 Budget is designed to stimulate the economy and help Britain to “Build Back Better”. But what does it mean for your small business?
The Chancellor announced new loan and grant schemes and changes to existing COVID-19 schemes, as well as changes to taxes. There could also be increased costs to SMEs, thanks to rises in the National Living Wage and increased corporation tax for larger businesses from 2023.
Here are the key changes for SMEs, as well as a reminder of how Credit Passport can increase your financial resilience.
Commonly called the furlough scheme, the Coronavirus Job Retention Scheme has been extended until 30 September 2021. It will pay 80% of employees’ wages. From July, employers will have to pay 10% of the hours not worked by staff, going up to 20% from August.
Non-essential shops will be allowed to reopen in April, and can apply for grants of up to £6,000 to help them reopen and trade safely. Grants of up to £18,000 will be available for businesses in the hospitality, accommodation, and leisure sectors, as well as gyms and personal care businesses, as these will be closed for longer. All Restart Grants will be administered by local authorities, so check their sites for details.
The Recovery Loan Scheme will provide loans of between £25,000 and £10 million, and asset and invoice finance between £1,000 and £10 million.
This new scheme will provide loans of between £25,000 and £10 million, and asset and invoice finance between £1,000 and £10 million. Applications will be open from 6 April 2021 and all businesses are eligible, even those that have previously received funding from COVID-19 loan schemes. To ensure that businesses receive the money, the Government will provide an 80% guarantee to lenders.
Starting in the Autumn, the Help to Grow scheme will help businesses boost their productivity It has two strands: digital and management. The digital strand will be a free online service offering advice on using software to manage customer relationships, selling online and managing accounts. It will provide 50% discount vouchers for software for eligible businesses. The management strand will provide a 12-week training course to businesses with 5-249 employees. Participants will pay £750, the remaining 90% being funded by the Government. You can register interest in either scheme on the Help to Grow website.
Businesses that hire an apprentice aged between 16 and 24 will now receive £3,000 (increased from £1,500). The incentive will be available until the end of September 2021 and applies to apprentices of all ages.
Separately, more funding is being made available to encourage employers to offer high-quality work placements and training for 16-to-24 year-olds in the 2021/22 academic year. The amount available is £1,000 per trainee.
For more details please check the links:
Government Coronavirus Job Retention Scheme Read more>
Recovery Loan Scheme Read more>
The 100% business rates holiday for retail, hospitality and leisure businesses will continue until the end of June. After that, rates will be discounted by two-thirds for the following nine months up to a maximum of £2m. The cap is lower for businesses that have stayed open.
The 5% reduced rate of VAT will be extended until 30 September 2021. For the next six months, it will be 12.5%, before returning to the standard rate of 20% from April 2022.
Eight new English Freeports will provide a low-tax environment. Benefits for businesses based there include no stamp duty, rebates for construction and machinery investment, zero business rates for five years, and lower tariffs and customs obligations. Freeports will be based at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
A “super-deduction” is available for companies investing in qualifying plant and machinery between 1 April 2021 and 31 March 2023. It will cut tax bills by 25p for every pound they invest.
A “super-deduction” is available for companies investing in qualifying plant and machinery between 1 April 2021 and 31 March 2023. It will cut tax bills by 25p for every pound they invest, providing a 130% super-deduction capital allowance and a 50% first-year allowance for qualifying special rate assets.
For more details please check the links:
Financial support for businesses during coronavirus (COVID-19) Read more>
Introduction of a new reduced rate of VAT for hospitality, holiday accommodation and attractions Read more>
Corporation tax will increase to 25% from April 2023 for companies with profits exceeding 25%. Above this level, a taper rate applies so that only businesses with profits above £250,000 will have to pay the full 25% rate. Businesses with profits of £50,000 or less will continue to be taxed at the small profits rate of 19%.
From April 2021, the National Living Wage will rise to £8.91 an hour. For the first time, it will be available for workers over the age of 23 (lower than the previous 25 years of age).
R&D tax credits provide a generous boost to all sorts of businesses of all sizes. They are often associated with sectors like engineering, aviation, manufacturing, pharmaceuticals and agriculture. But in reality, R&D tax credits can be claimed by many companies developing a new process. The new rules limited the amount that can be claimed in any given year to £20,000 plus three times the company’s total PAYE and NICs liability.
For more details please check the links:
National Minimum Wage and National Living Wage rates Read more>
Corporation Tax charge and rates from 1 April 2022 and Small Profits Rate and Marginal Relief from 1 April 2023 Read more>
To ensure your business is fighting fit for the future, please sign in & visit the Credit Passport dashboard. There you’ll find three ways to boost your business during the pandemic and beyond:
Interested in joining the Credit Passport community read up on creditpassport.com, or get your business credit score for free here.
