Chancellor Rishi Sunak confirmed the government’s spending plans for the year ahead in the highly anticipated 2021 Budget. There was a real focus on how the government would support small businesses and the self-employed through extension of existing schemes and the introduction of new measures.
Here, AXA gives a quick summary of the most notable updates that will be useful for someone who runs a small business or is self-employed.
Furlough is being extended until September
- The chancellor confirmed that the furlough scheme will be extended until the end of September, with the government paying 80% of the employee’s salary. However, employers will be asked to contribute 10% from July and 20% from August.
Self-employed income support is extended and more now eligible
- Help for self-employed people will be extended with a fourth self-employed income support grant. This grant will cover February to April and people will be paid 80% of their average trading profits up to £7,500. New changes also mean 600,000 more people will be eligible.
New Restart Grant will help businesses open after lockdown
- The £5 billion Restart Grant for businesses will help companies reopen and get going again. Non-essential retail will open first, so they’ll be entitled to grants of up to £6,000 per premises. Hospitality and leisure businesses will open later, so will receive up to £18,000.
The reduced VAT rate will be extended until September
- The 5% reduced rate of VAT will be extended until the end of September. It will then increase to 12.5% for six months before returning to the standard 20% rate from April 2022.
New incentives for hiring apprentices
- The incentive payments for hiring new apprentices are being doubled to £3,000 and £126 million will be invested in an attempt to triple the number of new traineeships.
Bounce-back loans are replaced with new government-backed scheme
- Bounce-back loans (BBL) and the coronavirus business interruption loan scheme (CBILS) will be replaced by a new recovery loan scheme of which 80% is guaranteed by the government. Loans can be between £25,000 and £10 million.
Support for retail, leisure and hospitality will be extended
- The business rates payment ‘holiday’ for retail, hospitality and leisure businesses has been extended until the end of June. Rates will then be discounted by up to two-thirds for the remaining nine months of the year.
Minimum wage increases to £8.91
- National Minimum Wage workers will get a 2.2% increase. The chancellor confirmed that National Minimum Wage will increase in April 2021 from £8.72 to £8.91 per hour for workers aged 23 and over.
Planned changes to IR35 will go ahead
- The planned changes to IR35 in April 2020 were postponed due to the coronavirus crisis. In his announcement, the chancellor confirmed the new rules will come into force on the 6 April 2021. Read more about IR35 here.
A freeze on tax-free personal allowance until 2026
- The tax-free personal allowance will increase from £12,500 to £12,570. The higher-rate tax threshold will increase from £50,000 to £50,270. These rates will be frozen from 2021 to 2026.
For the latest information about the 2021 Budget, visit the government’s website here.
