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Budget 2021

As part of the Budget released 3rd March, 2021 the UK Government has announced further support for employers and the self employed.

Help for Employers:

  • The personal tax allowance will increase from £12,500 to £12,570 for the new tax year 2021-22 and the plan is to keep it at this level until 2026.
  • The higher rate income tax threshold will increase by £270 to £50,270 from 6th April 2021 and will be frozen until April 2026.
  • The NIC primary threshold will increase by £68, from £9,500 to £9,568 for 2021-22.
  • The Coronavirus Job Retention Scheme is to be extended until the end of September 2021 with the government to continue paying 80% of employees’ wages for hours they cannot work. Employers will be asked to contribute 10% for July and 20% for August and September.
  • The grant for new apprenticeships made available by employers in England to be extended to September 2021 and the amount increased to £3,000.
  • Traineeships to get a £126 million boost to fund 40,000 more places.
  • The Employment Allowance remains at £4,000 and will apply to eligible employers whose Secondary Class 1 National Insurance Contributions liability is over £100,000 a year.
  • From 1st April 2021, the National Living Wage of £8.91 per hour will now be paid to employees aged 23 years and over instead of the previous age threshold of 25 years and older.
  • The Vat rate for the hospitality sector will remain at 5% until 30th September 2021. This will increase to 12.5% until 31st March 2022, with the 20% rate resuming from April 2022.
  • £5 billion in new Restart Grants for businesses announced – £6,000 for non-essential outlets that are due to re-open in April and for hospitality, accommodation, leisure, gym and personal care businesses, a one-off cash grant of up to £18,000.

Help for Self Employed:

To help self-employed individuals through the next stage of the COVID-19 pandemic, there will be a fourth and fifth Self-Employment Income Support grant.

The SEISS was originally announced to support self-employed individuals whose businesses were impacted by coronavirus. 

Fourth Self-Employment Income Support Scheme grant 

As with the third SEISS grant, the fourth grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total.  

The grant will cover the period from February 2021 to April 2021. 

It is expected claims can be made from late April.  

Further details on eligibility are due to be released but self-employed individuals who completed tax returns for the 2019/20 tax year will qualify, provided their return was submitted to HMRC by midnight on 2nd March 2021. 

The Government estimates this means that over 600,000 individuals may be newly eligible for SEISS grants, including many newly self-employed. The provisional guidance is that other eligibility criteria will remain the same as the third grant.   

Fifth Self-Employment Income Support Scheme grant  

The Government also announced a fifth and final SEISS grant covering the period from May 2021 to September 2021.  

The value of the fifth grant will be determined by a new turnover test.  

Individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500.  

Individuals whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.  

It is expected that the final grant can be claimed from late July 2021.  

Further details are expected to be published shortly. 

If you have further questions how the Budget affects you or your business contact AJR & Co Ltd.