On the 3rd of March 2021, the Chancellor, Rishi Sunak delivered the 2021 Budget to Parliament. The key highlights for business owners include:

• The Job Retention scheme (Furlough) has been extended to now end on the 30^th of September 2021. From July 2021, employers will contribute 10% towards the furlough scheme and then August and September that will increase to 20%.
• The current cut to VAT for hospitality continues (reduced 5% rate for takeaways, hotels and tourism) extended to the 30^th of September. Interim rate of 12.5% to then apply for another 6 months.
• Restart Grants will be available from April. Up to £6,000 per business for non essential shops and up to £18,000 for leisure and hospitality who have been closed and adversely affected. These grants are taxable
• Self employed businesses will receive a fourth and fifth grant based on 2019.20 tax return profits, which now means that those who were self employed in 2019.20 will be eligible to apply if they can show their businesses are adversely affected. There is a new measure looking specifically at turnover, so if your turnover has fallen by less then 30% for the fifth grant which is covering the May 2021 period onwards, you will only receive 30% of your average trading profits over the previous 3 tax years.
• The National Living Wage will increase from the 1st of April to £8.91
• The Chancellor has also allocated more Budget towards the Kickstarter hire scheme and is encouraging employers to hire more apprentices. There is a £3,000 one off payment made to employers who take on apprentices of any age.
• A new Recovery Loan scheme has been introduced, guaranteeing 80% of the loan value. Directors and business owners are expected to personally guarantee the remaining 20% given the change in insolvency laws that rank HMRC above banks in terms of final distribution ranks.
• The Business Rates holiday has been extended to the end of June, as has the Stamp Duty holiday for properties up to £500,000
• There is a 5% deposit loan guarantee for first home buyers. This however could cause negative gearing when re-mortgaging so should be approached with caution as it is expected house prices will increase as a result of more buyers entering the market, for what is very little housing supply currently.
• Current tax thresholds will be frozen for personal tax, life time pensions allowance and Inheritance Tax. The VAT registration threshold will not change for the next two years and will remain at £85,000
• Corporation Tax is set to increase from April 2023. A new small profits threshold will be brought in for profits under £50k – will pay 19% and profits above this will be tapered up to to £250k, where profits will then be subject to a 25% tax rate.
• Tax Losses can now be carried back three years instead of one years. This is a temporary measure.
• If companies buy plant and machinery, they will be able to claim a super deduction which gives them 130% tax relief on the purchase of the equipment. This is in place for the next 2 years.

The Budget has highlighted how important tax planning is for all business owners. Not every accountant specialises in this area so make sure you are with an accountant who knows tax and can make sure you are operating as tax efficiently as possible as a business owner.