Budget 2021 business highlights

Budget 2021 key business highlights 3.3.21

COVID-19 support measures

Recovery Loan Scheme: Lenders will be provided with an 80% guarantee on qualifying loans between £25,000 and £10 million. The scheme is open to all businesses including those that have already received COVID-19 guaranteed loans.

Coronavirus Job Protection Scheme (Furlough): This has been extended until the end of September 2021. Employees will be paid 80% of their wages for the hours they cannot work. Employers will be required to contribute to some of the costs from July.

The government will cover the wages for workers who have been put on leave due to the pandemic (up to a maximum of £2,500 a month) at the following rates:

  • 80% until the end of June 2021
  • 70% in July 2021
  • 60% in August and September 2021

Employers will have to pay the difference to 80% – so 10% of wages in July and 20% in August and September.

Self-Employment Income Support Scheme: A fourth grant will be available to those self-employed workers affected by the coronavirus pandemic. Claims can be made from April 2021 for grants worth up to 80% of three months’ average trading profits up to £7,500. A fifth grant will cover the period up to the end of September.

People who became self-employed in the 2019/20 tax year, and have filed a 2019/20 tax return, will also be eligible for the fourth and fifth grants.

Business Taxes

Capital allowances: Companies investing in qualifying plant and machinery will benefit from a new 130% first-year capital allowance or ‘Super deduction’. This means that, when your company invests, you can reduce your tax bill by 130% of the cost of the investment.

You can also benefit from a 50% first-year capital allowance on qualifying special rate and long-life assets.

Corporation Tax: Small businesses – those with profits less than £50,000 – will benefit from a “small profits rate” of 19%.

There will be a taper for profits above £50,000, so the 25% Corporation Tax rate will only apply to businesses who make profits of £250,000 or more.

Business rates: The multiplier used to calculate business rates has been frozen for 2021/22.

Loss carry back: The trading loss carry back rule will be temporarily increased from one to three years for all businesses. So firms can carry back losses of up to £2m for three years to cut their tax bill – with up to £760,000 of tax refunds.

Company vehicles: Fuel benefit and van benefit charges will increase in line with CPI from 6 April 2021.

Other announcements

Wages: Minimum wage to rise by 19p an hour to £8.91 for over-23s from April. It will hit £8.36 for those aged 21-22; £6.56 for those aged 18-20; £4.62 for 16 and 17-year-olds and £4.30 for apprentices.

23 and 24-year-olds included in highest minimum wage rate for the first time.

Apprentices: Employers who hire new apprentices between 1 April 2021 and 30 September 2021 will benefit from a payment of £3,000 per new apprentice.

Sovereign green savings bond: to be launched for everyday investors to buy through NS&I, to spend on renewable energy and clean transport. On sale later in 2021 with interest rate to be confirmed.