BUDGET 2021: Key takeaways that mobility businesses need to be aware of
Today, Chancellor Rishi Sunak presented the 2021 Budget to Parliament, outlining the key spending and tax plans set to impact businesses and to aid in the UK’s economic recovery.
Following the announcement, THIIS has summarised the key points from the 2021 Budget that mobility businesses need to be aware of, including furlough scheme extension and increases in corporation tax.
Rishi said that the Budget presents a three-part plan to protect jobs and livelihoods by offering support, fixing finances and building future economy.
A number of measures have been included to protect jobs and livelihoods. These include an extension of the Coronavirus Job Support Scheme to September 2021 across the UK. There will also be an extension of the UK-wide Self Employment Income Support scheme to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
Businesses with profits of £50,000 or less, around 70 per cent of actively trading companies, will continue to be taxed at 19 per cent and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25 per cent rate.
As part of an “investment led recovery”, from April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
Approximately 750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief. There will be an extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
A new “flexi-job” apprenticeship programme in England worth £7 million will enable apprentices to work with a number of employers in one sector. In addition, £126 million will be made available for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.
Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government. To further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company.
The UK Government has decided that it will cap the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).
Meanwhile, a new Help to Grow scheme with a digital and management boost will be offered to up to 130,000 companies across the UK.
Individuals and businesses in Scotland, Wales and Northern Ireland continue to be supported by the UK Government through the Coronavirus Job Retention Scheme, self-employment grants, loan schemes and VAT cuts.
Steve Taklalsingh, UK Business Managing Director at FinTech company, Amaiz, commented that his firm welcomes the focus on small business, particularly the self-employed who have been hardest hit financially during this pandemic.
He commented: “We’re pleased to see small businesses considered in the corporation tax changes, by excluding those earning over £50k profit from tax increases. However there is a worry about how this will be managed in the future. If the profit threshold, for example, doesn’t increase with inflation, it will provide less incentive for people to start businesses and risk investment.
“We would urge small businesses, who think they would benefit, to apply for the assistance with digital and management training as these skills are both essential for growing any business. We’ve spoken to many businesses who have only survived this year because of their management skills and their ability to go digital first. These skills aren’t just needed during a pandemic.”
Tommy McNally, tax expert and founder of Tommys Tax, said that the continuation of the Self-Employment Income Support Scheme was good news, as is the extension of the furlough scheme, but that the budget it is “very bad news” for big businesses, who will now be forced to move internationally.
He said: “Today’s budget is punishing successful businesses with the rise in corporation tax to 25 per cent. This is a massive increase and much more than I was expecting. These are the companies that haven’t received any help from the government so far and I believe it will only encourage more big businesses to go offshore.”
Gemma Hope, Director of Policy at disability charity Leonard Cheshire, stated that while it is positive that the Chancellor has recognised that the pandemic’s impact on the jobs market is going to be felt for some time yet, but it is disappointing that disabled people have been left out of the government’s offer as they need a long-term solution too.
“We cannot be said to be levelling up the country if inequalities are widening for disabled people,” she stated.
“We found that seven in 10 disabled people had seen their work negatively impacted by the pandemic. But the barriers facing disabled employees and jobseekers are structural – they won’t disappear when the current crisis ends. Disabled people should be able to expect fairness and equality in work, starting with a disability inclusive recovery plan from the government.
“This would involve specialised support for disabled people hoping to enter work, and extend eligibility for key programs like Kickstart to help more people at risk of long-term unemployment. We also need to see the gaps in our social care system addressed. Many working aged disabled adults need social care in order to work.
The Budget announcement today follows the UK Government’s recently announced lockdown exit roadmap, as the nation begins to gradually ease restrictions as coronavirus levels continue to fall.
This year’s Budget is set in the context of recovery from the global COVID-19 pandemic, which has seen the UK face unprecedented economic difficulties. For instance, the document outlines figures from the ONS that GDP in the UK for 2020 as a whole fell by 9.9 per cent – the largest annual fall in 300 years.To help turn around this situation, Rishi said that the 2021 Budget outlines plans to ‘unite and level up’ the UK’s economy.“
As the economy reopens, the Budget sets out the steps the government is taking to support the recovery, ensuring the economy can build back better, with radical new incentives for business investment and help for businesses to attract the capital, ideas and talent to grow,” the Budget states.