Business Tax 2021 Budget Review - Wellers Law Group

2021 Budget Review

           Business Tax

Self Employed Personal
Allowance & Tax Rates
Personal allowance rises to £12,570 from April 2021 then remains at this level
  up to and including 2025- 5th April 2026
Higher rate threshold rises to £50,270 then remains at this level up to and
  including 2025-5th April 2026
The higher rate for savings & dividend income will also apply UK-wide

Income Tax Bands For Self
Employed
2021-22 Tax band Income Tax rate £12,570-£50,270 20%
Higher rate £50,271-£150,000 40%
Additional rate More than £150,000 45%
This means that you can earn an extra £70 without paying any income tax

NIC Class 2 & 4 Self
Employed
Self-employed 2021-22
Less than £6,515 0%
£6,515-£9,658 £3.05 per week (Class 2 only)
£9,568-£50,270 9% + £3.05 per week
More than £50,270 2% + £3.05 per week

Corporate Tax

19% rate for profits up to £50,000
Tapering to main rate of 25% for profits over £250,000
From April 2023
Diverted Profits Rate will rise to 31% April 2023 (where diverting profits
  outside UK)

Trade Carry Back Loss
Relief
Trading loss carry back rule will be temporality extended from the existing one
  year to 3 years
Available for incorporated and unincorporated businesses
Unincorporated businesses and companies that are not members of a
  corporate group will be able to obtain relief for up to £2 million of losses in
  each of 2020-21 & 2021-22
Companies that are members of a corporate group will be able to obtain relief
  for up to £200,000 of losses in each of 2020-21 and 2021-22 without any group
  limitations

Trade Carry Back Loss
Relief cont.
Companies that are members of a corporate group will be able to obtain relief
  for up to £2 million of losses in each of 2020-21 and 2021-22,but subject to a
  £2 million cap across the group as a whole
Will be in forthcoming Finance Bill. Full details group cap announced in due
  course

New Capital Allowances
Offer
As a result of measures announced at this Budget, businesses will now benefit
  from four significant capital allowance measures:
The super-deduction – which offers 130% first-year relief on qualifying main
  rate plant and machinery investments until 31 March 2023 for companies
The 50% first-year allowance (FYA) for special rate (including long life) assets
  until 31 March 2023 for companies

New Capital Allowances
Offer cont.
Annual Investment Allowance (AIA) providing 100% relief for plant and
  machinery investments up to its highest ever £1 million threshold, until 31
  December 2021
Within Freeport tax sites, companies can access new Enhanced Capital
  Allowances and companies, individuals and partnerships can benefit from an
  increased level of Structures & Buildings Allowance for investments until 30
  September 2026

Main Rate Assets: Plant &
Machinery
Most tangible capital assets used in the course of a business are considered
  plant and machinery for the purposes of claiming capital allowances.
There is not an exhaustive list of plant and machinery assets. The kinds of
  assets which may qualify for either the super-deduction or the 50% FYA
  include, but are not limited to:
                           Solar panels               Office chairs and desks,
                           Computer equipment and     Electric vehicle charge points
                             servers                   Refrigeration units
                           Tractors, lorries, vans    Compressors
                           Ladders, drills, cranes    Foundry equipment

What are Special Rate
Assets
Special rate pool
parts of a building considered integral - known as ‘integral features’
items with a long life
thermal insulation of buildings
cars with CO2 emissions over a certain threshold

Integral Features

Integral features are:
lifts, escalators and moving walkways
space and water heating systems
air-conditioning and air cooling systems
hot and cold water systems (but not toilet and kitchen facilities)
electrical systems, including lighting systems
external solar shading

Long Life Assets

These are items with a useful life of at least 25 years from when they were
  new.

Freeports

East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region,
  Plymouth, Solent, Thames & Teeside
Generous tax reliefs
Simplified customs procedures

Freeports – tax sites

Enhanced 10% rate of Structures & Buildings Allowance for constructing &
  renovating non- residential structures & buildings – investment fully relieved
  after 10 years for corporation and income tax – to qualify building must be
  brought into use on or before 30 September 2026
Enhanced capital allowance of 100% for companies investing in plant &
  machinery for use in Freeport – applies to both main and special rate assets –
  available until 30 September 2026

Freeports – tax sites
cont.
Full relief from SDLT on land or property within Freeport – must be purchased
  & used for qualifying commercial purpose. Available until 30 September 2026
Full Business Rate Relief for all new businesses and certain existing businesses
  where they expand until 30 September 2026. Relief applies for 5 years from
  first receipt
Government intends to make employer NI contributions relief available for
  eligible employees in Freeport sites from April 2022 –available until at least
  April 2026 with the intention to extend to April 2031, subject to review

VAT Registration Threshold

Maintained at turnover £85,000, up to and including 2023-2024
Deregistration threshold remains £83,000 including 2023-24
UK-wide VAT reductions for tourism, & hospitality
Extension to the VAT cut to 5% for goods & services supplied by hospitality,
  accommodation and attractions across UK until 30th September 2021
Followed by 12.5% rate for a further 6 months until 31 March 2022

VAT Registration Threshold
Cont.
UK-wide VAT deferral scheme
 Any business that took advantage of the original VAT deferral on VAT returns from 20 March
  though to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to
  pay that deferred VAT in up to eleven equal payments from March 2021, rather than one
  larger payment due by 31 March 2021

You may be charged interest or a penalty if you do not:
     pay the deferred VAT in full by 31 March 2021
     opt into the new payment scheme by 21 June 2021
     agree extra help to pay with HMRC by 30 June 2021

Powers to tackle Electronic Sales Suppression

SME R & D Tax Credit

Capped :max in any one year £20,000 (plus 3 times the company’s total PAYE
  and NICs liability)

R & D Tax Credit
Consultation on Scope
Spring Budget Government announced would consult on what costs
  companies can include in R & D tax credit claims
In particular whether these should include the costs of accessing datasets
  (costs of data acquisition) and payments for cloud computing services as well
  as the costs of data cleansing and manipulation
21 July 2020 Government launched consultation – received 50 responses
3 March 2021 Updated with Outcome of Consultation – summary of responses
Respondents in favour of data & cloud computing brought into scope

R & D Tax Credit
Consultation on Scope
Decision to be taken alongside the wider review of R & D tax credits
  announced at the budget
Trends now to lease software and access via the cloud as opposed to
  traditional software stored on premises
Software as a service – user accesses 3rd party software
Infrastructure as a service – user accesses instant computer infrastructure e.g.
  Google Cloud Platform, Microsoft Azure
Platform as a service – user manages a software application running on the
  platform

R & D Tax Credit
Consultation on Scope
Essential modern form of computational R & D therefore cloud computing
  costs should qualify by the same rationale as software costs
Currently physical servers and in house digital infrastructure attract relief via
  Capital Allowances Annual Investment Allowance or R & D Allowance and
  software is qualifying expenditure for R & D.
Cloud computing services currently no similar relief
  Qualifying indirect activities – e.g ancillary activities – e.g. recruitment/admin
  – to be examined

R & D Tax Reliefs
consultation
Launched Budget 2021
Currently: Research & Dev Expenditure Credit (RDEC) = 13% of qualifying R & D
Research & Dev tax relief for small and medium enterprises (SME scheme)
  130% deduction of qualifying costs from profits on top of the normal 100%
  deduction & if loss making a tax credit worth 14.5% of the surrenderable
  element of that loss
Covers expenditure on staffing costs (employees and agency), consumable or
  transformable materials e.g. water, fuel, power. Some software, some
  subcontracting costs, payments to clinical trial volunteers

Apprenticeships
Extension of the apprentices hiring incentive in England – increased to £3000
Employers who hire a new apprentice between 1 April 2021 and 30 September
  2021 will receive £3,000 per hire ( previously £1500 or £2k if 24 years old and
  under)
This is addition to the existing £1,000 payment the government provides for all
  new 16-18 year old apprentices & those under 25 with an Education, Health
  and Care Plan.
New flexi – Job apprenticeship programme in England – enable apprentices to
  work with a number of employers in one sector

Business Rates Relief
Continue 100% business rates relief for eligible businesses in retail, hospitality
  and leisure sectors in England from 1 April 2021 to 30th June 2021.
   This will be followed by 66% business rates relief from 1 July 2021 to 31
      March 2022
   Capped at £2M per business for properties that were required to be closed
      on 5th January 2021 or £105,000 per business for other eligible properties.
   Nurseries will also qualify for relief ‘other eligible properties’
   Legislation due to ensure where business rates repayments have been
      made they will be deductible for corporation tax and income tax

Statutory Sick Pay
Small & Medium sized employers in UK will continue to be able to reclaim up
  to two weeks of eligible SSP per employee from the Government – temporary
  measure

Recovery Loan Scheme
A new loan scheme to support access to finance for UK business
Ensures business can access up to £10 million in loans and other kind of
 finance once the existing COVID-19 scheme closes
The government guarantees 80% of the finance to the lender
Launches on the 6th April and is open until 31st December (subject to review)
Finance available:
    Term loans & overdrafts between £25,001 and £10 million per business – up to 3 years
    Invoice and asset fiancé between £1,000 and £10 million per business – up to 6 years
You will be able to apply for a loan if your business is trading in the UK
Businesses who have already received support under the existing COVID-19
 guaranteed loan scheme will still be eligible under this scheme as long as they
 meet all other eligibility criteria
Scheme launches 6th April 2021

Self-Employment Income
Support – 4th Grant
The 4th SEISS grant is set at 80% of 3 months trading profits, paid in a single
 instalment, capped at £7,500
This grant is now open to those who submitted a 2019-2020 tax return, so is
 now open to those that became self employed in this year
The rest of the eligibility criteria remains the same
Even for those who received the first 3 grants, the amount you are eligible for
 may change since your eligibility is now based on the 2019-2020 tax year
Eligibility clauses:
    You must have traded in both 2019-2020 and 2020-2021
    Be currently trading but impacted by reduced demand or have been trading but are
     temporality unable to do so due to COVID-19
    You must also declare that you intend to continue to trade and that you reasonably
     believe that there will be a significant reduction in trading profits

Self-Employment Income
Support – cont.
The online claims service for this grant will be available from late April 2021
 until 31st May 2021
HMRC will contact those eligible by mid-April

There will also be a fifth and final grant which covers May 2021 to September
 2021 – this can be claimed from late July
The fifth grant will be worth as follows:
  80% of 3 months av. Trading profits capped at £7,500 for those with a
    turnover reduction of 30% or more
  30% of 3 months av. Trading profits capped at £2,850 for those with a
    turnover reduction of less than 30%

Restart Grant Scheme

Rishi Sunak has introduced a new ‘Restart Grant’ worth £5bn to help small
 business who are worst affected to get restarted
Up to £18,000 is available for businesses in hospitality, accommodation,
 leisure, personal care and gyms
Non-essential retail business can get up to £6,000 to help them reopen
The scheme will be administered by local councils
This grant is replacing the Local Restriction Support Grant for both Open and
 Closed businesses, since this closes at the end of the month

Thank you for listening…

            …Any questions?