Rishi Sunak’s budget speech today provided an extension to a string of Covid support schemes to the end of September and beyond.
CORONAVIRUS JOB RETENTION SCHEME (CJRS)
The furlough scheme, which pays 80% of employees’ wages for the hours they cannot work during the pandemic has been extended until September.
As was the case last year, the scheme will be slowly phased out from the end of June with employers paying an increasing share of the wages to the cessation three months later.
From April the minimum wage will increase by 19p an hour from £8.72 to £8.91, a 2.2% rise and will be for over-23s.
SELF EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)
Two more rounds of assistance are planned for the self-employed which allows a claim of 80% of three months average trading profits up to £7,500.
There is no assistance for directors of limited companies who are paid dividends.
The VAT rate will remain at 5% for holiday caravan & camping parks and similar holiday accommodation businesses.
The VAT rate will be lifted to 12.5% from 1 October.
From April next year it will return to the pre-pandemic rate of 20%.
The VAT threshold of £85k will remain.
Corporation tax for smaller companies with profits of up to £50k pa will remain at 19%.
There will be a tapering of rates for companies with profits of up to £250k pa.
Larger companies will pay the higher rate of 25% from 2023.
INCOME TAX AND NATIONAL INSURANCE
PERSONAL INCOME TAX THRESHOLDS
From April 2022, the income tax personal allowance and higher rate threshold will be uplifted via reference to the consumer prices index (CPI) and continue for 4 years.
As a result, higher earners will pay more and as income increases, more workers will enter the higher tax brackets.
Business rates relief for retail and hospitality is to be extended to 30 June and thereafter be discounted by 67% until April next year.
The bounce Back Loan Scheme will be replaced by a Recovery Loan Scheme which will be 80% government/lender guaranteed.
The cost of investment in plant and machinery will allow a claim against tax of 130% of that cost.
Earlier this week it was announced that shops and hospitality may be eligible for grants up to £18k contained in a £5bn scheme.
A return to pre-Covid levels for the UK economy is expected by the middle of 2022.