The 2021 budget: what small business owners need to know
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If you’re a small business owner then you already know that the 2021 budget announcements are big news. We’re going to break down everything you need to know.

In early March, Chancellor Rishi Sunak announced his new budget. There are big changes coming to the furlough scheme, corporation tax, apprenticeships and lots of different areas that you might need to know about.

For the most part, these changes should be good news for small businesses across the UK!

Our handy guide below will help you get to grips with the basics of the upcoming changes.

Please get in touch via email at info@citrushr.com or over the phone on 0333 014 3888 if you need any further information or support.

The main eight points for employers from Chancellor Sunak’s budget are:

  1. Furlough Scheme to be extended
  2. Increase to Apprentice Incentive payments
  3. Trainee grants
  4. Business Rates holiday extension
  5. Reduced VAT rate for hospitality and tourism extended
  6. Restart grant
  7. Corporation tax rises
  8. Statutory Sick Pay Scheme to remain

1 – Furlough Scheme to be extended

The Furlough Scheme – where the government pays 80% of an employee’s salary for companies struggling during the Covid-19 pandemic – was due to end on 30th of April. This scheme has now been extended until 30th September 2021.

But from 1st July the government will be supplementing less of your employee’s wages.

  • From now until June 2021 – you can claim 80% of your employee’s wages up to a cap of £2,500.
  • From 1st July 2021 – the government will reduce its support to 70% of your employee’s wages up to a cap of £2,187.50. You will be expected to pay 10% towards your employee’s pay packets alongside national insurance and pension contributions.
  • From 1st August 2021 – the government’s contributions will reduce to 60% of employee wages up to a cap of £1,875. You will be expected to pay 20% towards your employee’s wages alongside national insurance and pension contributions.

2 – Increase to Apprentice Incentive payments

The Apprenticeship Incentive – where employers are offered £2,000 to take on apprentices aged 16-24 and £1,500 for any 25 or over – was due to finish at the end of March. It has now been extended to the end of September 2021.

The grant has also been doubled to £3,000 per apprentice regardless of their age.

This is great news for employers looking to take on young talent.

3 – Trainee grants

The government has announced an additional £126m to go towards supporting 40,000 traineeships for 16-24 year olds in the 2021/2022 academic year.

Employers that take advantage of this will receive £1,000 per trainee.

4 – Business rates holiday extension

The 100% business rates holiday has been extended until the end of June 2021 to help retail, leisure and hospitality businesses with their finances. After June these businesses will receive a ⅔ discount until the end of the year.

5 – Reduced VAT rate for hospitality and tourism extended

The 5% reduced VAT for hospitality and tourism businesses has been extended until the end of September 2021. From October the rate will be increased to 12.5% for the next six months.

6 – Restart grant

The government has also announced a new restart grant for businesses. From April, non-essential retail businesses will receive a grant of up to £6,000 per premises. Hospitality and leisure businesses will be able to enjoy a grant of up to £18,000 per premises.

More money has been set aside to help museums, theaters, galleries and sports organisations.

7 – Corporation tax rises

From April 2023 corporation tax is set to increase to 25% for businesses with profits of £250,000. Companies with profits of £50,000 or less will benefit from a smaller rate of 19%, and for those with profits between the two thresholds the corporation tax will taper between 19-25%.

Companies will only pay the increased rate on profits over £250,000.

8 – Statutory Sick Pay Rebate Scheme to remain

The temporary Statutory Sick Pay Rebate Scheme – where employers can claim a refund for statutory sick payments related to coronavirus for up to two weeks – will be staying for now to help smaller companies manage high levels of sickness leave during the pandemic.

Plus a short note on minimum wage increases

From 1st April the National Living Wage will be extended and increased. Now anyone over the age of 23 can enjoy the increased rates from £8.72 to £8.91. Previously the top rate applied to those aged 25 and over, so this is a big win for younger workers.

The National Minimum Wage will increase as follows:

  • Workers aged 21 to 22 – from £8.20 to £8.36
  • Workers aged 18 to 20 – from £6.45 to £6.56
  • Workers aged 16 to 17 – from £4.55 to £4.62
  • Apprenticeships – from £4.15 to £4.30

And finally there have also been increases to the following statutory rates:

  • The weekly statutory sick pay rate – from £95.85 to £96.35
  • The weekly statutory maternity pay, maternity allowance, statutory paternity pay, statutory shared parental pay, statutory adoption pay and statutory parental bereavement pay rates – from £151.20 to £151.97

 

The government’s name and shame scheme will be staying with us this year, so it’s best to stay on top of these changes. Under the NMW Naming Scheme any organisations that owe arrears of over £500 in national minimum wage payments will be named.

If you need any further advice or information please email us at info@citrushr.com or give us a call on 0333 014 3888.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use. If you require professional advice, please get in touch.

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