What The 2021 Budget Means For Your Business – 6 Key Takeaways

With so much speculation prior to the announcement which would set out plans to restart the economy, we wanted to look through the chancellor’s all-important budget and see what has actually been announced, when the headline-grabbing items will be put into place, and most importantly, what it means for you.

Corporation Tax Increase

In the last 12 months throughout the coronavirus pandemic, over £100bn has been spent on support for jobs through schemes such as Furlough – £100bn which the government need to make back in one way or another. Higher corporation tax was widely believed to be the solution for recouping some of the financial support which was given to businesses in 2020, so it came as no surprise to see a big increase announced here. 

So, from 2023, corporation tax will be increased from 19% to 25%. However, only 10% of all companies will actually pay the new rate, and around 70% of companies will be exempt from the increase altogether. 

Any small business with profits of £50,000 or less will continue to pay 19% in corporation tax, and then a tapered rate will be introduced for businesses with profits between £50,000 and £250,000. Only businesses with profits which exceed £250,000 will be taxed at the 25% rate.

Find the latest guidelines and more information on corporation tax rates here

Super Deduction 

Aside from sounding like a terrible supermarket advertising campaign slogan, the super deduction will have a hugely beneficial impact on taxable profits.

Set to begin in April 2021, the super deduction is a tax break for investment in new plant and machinery equipment, meaning that companies’ tax bills will be cut by 25p for every pound they invest, which can reduce taxable profits by 130% of the cost. 

The hope is that businesses will take advantage of this tax reduction and invest, despite the economic uncertainty moving forwards, in new equipment which will help them (and ultimately the economy) grow.

However, the super deduction will only last until the end of March 2023, so it makes sense to take advantage of this if you can whilst it’s in place.

For more information on what this tax break could mean for you, read the latest on the government’s super deduction scheme

Restart Grant

After three lockdowns resulting in non-essential retail being closed for 207 days, the government needed to announce something in the 2021 budget to help the highstreet to survive moving forwards. 

The Restart Grant has been announced in a bid to help non-essential stores reopen on April 12th, which entitles businesses who have been forced to close up to £6,000. 

Your business could be eligible if: it’s based in England, occupies property on which it pays business rates (and is the rate payer), has been required to close because of the national lockdown from 5th January onwards, or between November 5th and December 2nd, has been unable to provide its usual in-person customer service from its premises. 

You’ll need to apply through your local council – find out more about the Restart Grant here

Help to Grow

Another small business support scheme was announced in the shape of ‘Help to Grow’ which will do exactly as the name suggests. Around 130,000 small and medium sized businesses will be able to take advantage of Help to Grow, which will provide support with tools and training in Digital and Management. 

Management

The management support with Help to Grow will be launched first, in June 2021, which is a 12 week long Executive Development Programme and will be delivered by business schools across the UK. The aim is that by the end of the 12 weeks, you’ll have developed a tailored business growth plan which you can implement and get your business to reach its full potential. 

The even better news with this is that the programme is 90% subsidised by the government, meaning the cost to you is £750.

However, only 30,000 spaces will be available over 3 years, and we can imagine there being a lot of interest in this. Find out more and register your interest here.

Digital

The other aspect of Help to Grow is Digital, which is set to launch in Autumn. The aim of Digital Help to Grow is to offer small businesses free and impartial advice on how, and what, technology and online platforms can improve business performance.

Further details on the specific platforms are yet to be announced, but the government has so far advised it will be expected to be three types of software which helps businesses to; build customer relationships and increase sales, make the most of selling online, and manage their accounts and finances digitally.

Small businesses will be able to get a discount of up to 50% on the costs of approved software, worth up to £5,000. All businesses will be able to take advantage of the advice, and specific criteria has been set around the 50% off vouchers. 

For more information on this and to register your interest in Help to Grow Digital visit here.

Self Employed Support

If you’re self employed, you’ll know that whilst the government have provided a lot of support to businesses during the Covid-19 pandemic, a lot of self employed workers and business owners have been excluded from a lot, if not all, government financial support. 

However, a fourth and fifth grant has been announced which will cover June, July, and August, and provide support to more people, including those who are newly self employed, provided you submitted a 2019-2020 tax return by midnight on March 2nd.

Find out more about the fourth grant with the Self Employment Income Support Scheme here

Plastic Packaging Tax Reminder

Whilst this wasn’t mentioned in this year’s budget, the events in the last year may have (understandably) caused it to slip your mind, but don’t get caught out by it.

Any reason to be more sustainable is a good reason for us, and the Plastic Packaging Tax is a start. It’s set to be introduced in April 2022, and will apply to plastic packaging produced in, or imported into, the UK that does not contain at least 30% recycled plastic.

The tax rate has initially been set as £200 per tonne of plastic packaging, so make sure you’re speaking with your suppliers and manufacturers to ensure your packaging meets (and ideally far exceeds) the mark!

For more information on the plastic packaging tax and what you need to do, check the latest guidelines

And that’s our round up of the key budget takeaways for businesses – how will they affect you? Do you intend to take advantage of the new Help to Grow support? Let us know your thoughts in the comments below