Budget 2021 was announced on Wednesday 3 March, detailing all the changes made in response to the pandemic and the financial impact it’s had on the UK.
Here are the changes that Budget 2021 affects your small business:
Furlough extended.
The furlough scheme which pays 80% of employees’ wages for hours they cannot work during the pandemic has now been extended until the end of September. This scheme has protected the jobs of millions who can’t work due to businesses having to close during lockdown. This is a relief to employees and businesses as it has secured jobs while also giving businesses the freedom to open without having to bring back all their staff straight away.
Self- Employed Grants extended.
The Self-Employment Income Support Scheme (SEISS) provides financial support for self-employed people whose businesses have been affected by the coronavirus. This scheme has been extended, with two further payments available:
The fourth payment covers the three- month period from February until the end of April. This payment is the same as the previous SEISS grants, it’s worth up to 80% of trading profits, averaged over three months and up to £7,500 in total.
Claims can be made from April for the fourth grant.
The fifth payment covers May to the end of September. The amount available will be different from all the previous payments and will be based on the loss of income. Those whose turnover has fallen by 30% or more will receive the 80%, while those whose turnover has fallen by less than 30% get the 30% grant.
The Government has also widened access to these grants, meaning that a further 600,000 self-employed people will now be eligible to access this grant.
New Recovery Loan Scheme.
The New Recovery Loan Scheme ensures that businesses of any size can continue to access loans and other kinds of finance (up to £10 million) once the existing COVID-19 loan schemes close. The government guarantees 80% of the finance to the lender, offering a security net for both you and your lender.
The New Recovery Loan Scheme includes:
- Term loans and overdrafts between £25,001 and £10 million (per business).
- Invoice finance and asset finance between £1,000 and £10 million (per business).
The scheme launches on Tuesday 6 April 2021 and continues until Friday 31 December 2021 (subject to review). The loans are only available through a network of accredited lenders; these names will be made public leading up to the start of the scheme.
To be eligible, you must be able to show that your business
- Is viable or would be if it wasn’t for the pandemic.
- Has been impacted by the pandemic.
- Is not in collective insolvency proceedings.
All businesses are included apart from banks, building societies, insurers, reinsurers, public-sector bodies, state-funded primary and secondary schools.
Income Tax thresholds frozen.
The personal income tax threshold is frozen until 2026. This means that as salaries rise in line with inflation, more people will fall into the tax bracket. This freeze is in response to the extra costs from Coronavirus support.
- The basic rate will be frozen at £12,570
- The higher rate will be frozen at £50,270
The ‘Help to Grow’ Scheme.
From June, small businesses have access to a 12-week programme delivered by leading business schools across the UK. This programme helps small businesses develop their skills in business management and digital training to lead their business to its full potential.
The Help to Grow scheme is for any business that has been operating for more than one year, with 5 to 249 employees. The participant in the scheme should be a decision-maker or member of the senior team within the business.
There are 30,000 places available over 3 years. The programme is 90% subsided by the government, therefore participants will be charged £750.
Need help and support with your small business finance and accounting? Have a chat with Vicky today to see how we can help.
