UK Spring Budget 2021: 19 Things You Need to Know About the Budget

Jordan Macey

April 21, 2021

UK Budget 2021 Key Announcements

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Small Business Accounting

Covid-Relief

1. Furlough scheme extended to September 2021

The government has committed to continue paying 80% of employees’ wages when they are unable to work, with employers not having to make any contributions until July 2021.

2. Support for the self-employed extended to September 2021

As part of the covid support package from the government, the the Chancellor confirmed that he will extend the self employed income support scheme with those submitting a self assessment tax return before midnight 2nd March being eligible.

3. Universal Credit uplift to stay for 6 months

The £20 weekly uplift in Universal Credit has been extended for a further 6 months, with Working Tax Credit claimants being eligible for a £500 one-off payment.

Personal Tax

4. Income/personal tax thresholds frozen

The chancellor has announced that there will be no changes to rates of income tax, National Insurance or VAT and the corresponding tax free allowances and thresholds are to be frozen for 5 years.

5. Stamp duty holiday extended to June 2021

House purchases/sales of less than £500,000 will continue to have no tax charged up to 30th June 2021.

6. Inheritance, pensions and capital gains allowances to be frozen

Plans were revealed that Inheritance tax thresholds, pensions lifetime allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-26.

7. Duty on alcohol and fuel frozen

Duty on alcohol and fuel continues to be frozen for the next 12 months and planned increases are cancelled.

Company Tax

8. Corporation Tax to increase to 25%

The announcement has revealed that the government will raise the current rate of corporation tax of 19% to 25% in April 2023 for businesses with profits exceeding £250,000. Businesses with profits less than £50,000 will be charged at a small profits rate matching the current rate of 19%.

9. New ‘super deduction’ of 130% tax relief on investments

A new initiative announced by the Chancellor sees that a new super deduction will be introduced allowing businesses to claim 130% of investment costs against their taxable profits reducing their tax payable for qualifying plant and machinery assets.

10. Additional Corporation Tax relief for loss-making businesses

Businesses making a loss in the financial years 20/21 and 21/22 will be able to carry back their losses for an extended 3 year period of up to £2m.

11. Lowered VAT for the hospitality sector extended until September

Businesses within the hospitality sector can continue to utilise the lowered 5% VAT rate until September with then an interim rate of 12.5% applying for 6 months before returning to the standard rate of VAT.

12. Business rates holiday to continue until June

Businesses will continue to receive a holiday of paying rates in England until June, after which a 75% discount will be applied.

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Business Funding & Grants

13. Business restart grant announced for those businesses that have had to close

Businesses that were forced to close their doors as part of the ongoing covid restrictions will be able to access grants upon re-opening. This has been announced at £6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses that will be required to open later down the line.

14. A Recovery Loan Scheme is set to launch in April

The Recovery Loan Scheme ensures businesses of any size can continue to access loans and other kinds of finance up to £10 million per business once the existing Covid-19 loan schemes close, providing support as businesses recover and grow following the disruption of the pandemic and the end of the transition period.

Employment & Training

15. Minimum wage increase

The minimum wage will increase to £8.91 an hour from April onwards.

16. Increased incentives for apprenticeships

The apprentice hiring incentive in England was extended to September 2021 and the payment increased to £3,000. A flexi-apprenticeship scheme was also announced that will allow apprentices to work with multiple employers in a sector.

17. Announcement of the Help to Grow Programme

The Chancellor announced a new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost. The programme aims to help small and medium-sized businesses across the UK learn new skills, reach new customers and boost profits by assisting with the provision of training in key areas such as management and utilising digital technologies.

Limited Company Expenses Guide

What's Inside:

  • Allowable business expenses
  • Employee expenses
  • Travel expenses
  • Office & equipment expenses
  • Professional services expenses
  • General expenses
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Limited Company Expenses Guide

What's Inside:

  • Allowable business expenses
  • Employee expenses
  • Travel expenses
  • Office & equipment expenses
  • Professional services expenses
  • General expenses

IR35

18. No mention of IR35

There was no mention of the planned changes to the current IR35 legislation suggesting that the previously postponed plans will go ahead in April 2021.

Mortgages

19. A new Mortgage Guarantee Scheme to assist with 5% deposits

A new mortgage guarantee scheme will be introduced in April 2021. This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000. Under the scheme, all buyers will have the opportunity to fix their initial mortgage rate for at least five years should they wish to.

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Can I expense Food & drink? Guide

Can I expense Food & drink?

You can claim "reasonable" food and drink expenses when you're travelling for business, if:

  • You're making an occasional business trip outside of your normal pattern of travel
  • You're staying overnight, and are also claiming accommodation costs
  • Your trade is, by nature itinerant

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense gym fees? Guide

Can I expense gym fees?

As a sole trader, you can't claim for gym membership fees.

As a limited company director, you can claim for gym membership via your company. A benefit in kind (BIK) charge will arise against the employee, and the company will need to pay Class 1A NICs on the total cost of the membership.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Motor vehicle expenses? Guide

Can I expense Motor vehicle expenses?

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What expenses can I claim as a contractor? Guide

What expenses can I claim as a contractor?

As a contractor, there are a vast number of different expenses that can be claimed for when working through a limited company.

These expenses must be deemed wholly, exclusively and necessary for business to carry out it's duties and some examples can include:

  • Travel
  • Food (subsistence)
  • Accommodation
  • Computer & office equipment
  • Postage & Stationery
  • Accountancy & professional fee's
  • Insurance
  • Telephone & internet
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Can I expense a Bicycle or use the Cycle to Work scheme? Guide

Can I expense a Bicycle or use the Cycle to Work scheme?

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What are the HMRC approved mileage rates? Guide

What are the HMRC approved mileage rates?

The HMRC approved mileage rates are as follows:

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Why are expenses important? Guide

Why are expenses important?

Expenses are important as you can claim them against your revenue, which helps to reduce the amount of tax you need to pay.

For further information on the types of expenses you can claim, refer to our guides for sole traders and limited company directors.

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Can I expense Software? Guide

Can I expense Software?

You can claim the costs of purchasing computer software that your business uses for less than two years. You can also claim for computer software that you use for more than two years, if your company makes payments regularly to renew the license.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Trivial benefits? Guide

Can I expense Trivial benefits?

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Can I expense my use of home as an office? Guide

Can I expense my use of home as an office?

There are two methods you can use to work out your allowable home expenses: you can claim a flat rate allowance (also known as simplified expenses), or claim a proportion of your bills. For further information on these methods, refer to our expenses and allowances guide for limited company directors and the self-employed.

If you're a sole trader and aren't sure which method is the better option for your business, you can use Gov.uk's simplified expenses checker tool.

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How to make and send an invoice for your clients Guide

How to make and send an invoice for your clients

You've delivered your work, and it's time to receive your payment.

Before that, you'll need to make an invoice. It's an important document: not only does it help you obtain money you're owed, it also serves as evidence of a transaction in the event that you need to seek legal action to handle non-paying clients.

If this is new to you, you might be wondering: How do I create an invoice, and what must I include? Are there best practices or tips I need to know?

We'll answer all of these questions below:

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Personally paid expenses vs company paid expenses Guide

Personally paid expenses vs company paid expenses

Where possible, it is advisable to cover any company expenditure directly using company funds such as directly via the company bank account. This ensures that all company transactions are kept in one place and can be easily tracked.

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How do I plan cashflow? Guide

How do I plan cashflow?

Here are a few strategies to better cash flow management:

Be rigorous about updating your cash flow: It can be helpful to update your cash flow whenever there is new information-such as when you've made a payment, or when a client informs you that a payment is coming in late. You'll need to have a system for managing your cash flow, whether that's a spreadsheet or cash flow management tool.

Carry out an in-depth analysis on a regular basis: Carve out a block of time each quarter to carry out an in-depth review of your cash flow. You'll want to assess your overall financial position, and look ahead at your cash flow projection for the next quarter.

Implement milestone payments for extended projects: If you're working on an extended project, consider structuring your payments by milestones-rather than receiving a single payment at the end of the project.

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Can I expense motorcycle/ moped? Guide

Can I expense motorcycle/ moped?

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Can I expense Postage? Guide

Can I expense Postage?

You can claim postage costs as a business expense.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense Parties (or staff entertainment)? Guide

Can I expense Parties (or staff entertainment)?

As a limited company director, you can can claim for the costs of hosting a staff party, as long as the following conditions apply:

  • Your cost per pax shouldn't exceed £150 (including VAT). Your employees may invite a partner, and if they do, your total budget for an employee and an additional guest will be £300.
  • The main purpose of the event is to entertain your staff members. As such, most of the event attendees should be your employees.

Do note that the per pax budget of £150 applies across the year, so you can claim for several staff events as long as the costs fall within the budget. You can claim this expense even if you're the sole employee in your business.

As a sole trader, you're not considered an employee. As such, you can't claim the costs unless you have employees.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Can I expense childcare? Guide

Can I expense childcare?

As a sole trader, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the tax-free childcare scheme.

As a limited company director, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the childcare voucher scheme or tax-free childcare scheme.

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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Contractor Accounting Services Guide

Contractor Accounting Services

We pride ourselves on providing an unparalleled level of support that will make you feel valued, eliminate your admin and ensure you're being as tax efficient as possible.

VAT registration & filing

We'll registered your company for VAT, and ensure VAT is always filed well ahead of the deadline. We will ask you to confirm that you're happy for us to automatically file your VAT without having to approve it which will ensure that we can get this filed as soon as possible.

We'll also help you get setup with a Direct Debit for HMRC so that you can make your VATpayments automatically without having to manually do this every quarter. This saves you time and the stress of ensuring you've paid on time, and importantly will make sure you don't have to pay a penalty for a missed deadline.

Annual accounts

We aim to complete your annual accounts well ahead of schedule to ensure you have complete financial records.

Corporation tax

You should never have to guess how much corporation tax is due. We'll make sure you know how much is due and when it's due.

Confirmation statement

We'll make sure to keep your Companies House account up to date and ensure your confirmation statement is filed on time.

Self assessment

We include a Self Assessment with our operate and grow packages and this is also available as an additional £99+VAT one-off charge.

Tax efficiency

From your salary, dividends, pension, investments and company expenses, we'll help you optimise your tax.

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Can I expense Magazines, books & journals? Guide

Can I expense Magazines, books & journals?

The costs of purchasing magazines, books and journals can be claimed as a deductible expense, as long as these items are required for your business (e.g. trade publications, professional journals, training materials).

For further information on allowable business expenses, refer to our expenses and allowances guides for limited company directors and the self-employed.

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How much should accounting cost? Guide

How much should accounting cost?

As a new business owner, you'll often find yourself juggling numerous roles and tasks-from growing your business, to managing your operations, financesand taxes.

In addition, you're now required to meet your legal obligations as a limited company director-such as filing the necessary paperwork and accounts on time-or you'll risk being penalised.

Staying on top of all of these tasks can feel overwhelming, and here's where a limited company accountant comes into the picture.

Below, we'll look into:

  • What you can expect to pay for limited accounting packages
  • Services that are included in the cost
  • FAQs relating to choosing a limited company accounting provider
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Limited Company Expenses Guide