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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Coronavirus Business Support Guide

Coronavirus Business Support

-HMRC's Time to Pay system:

The HMRC Time to Pay System can help businesses facing short-term cash flow issues. Companies that need to access this system can find government advice here.

A dedicated helpline has also been launched so businesses in financial distress with outstanding tax liabilities can get help fast on 0800 015 9559.

Coronavirus Business Interruption Loan Scheme:

The government has also announced a Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to allow small businesses to apply for a loan of up to £5 million, with the government covering up to 80% of any losses with no fees.

The Government has announced the £330 billion will be made available and if more is needed then it will be provided. These loans will be interest free for 6 months.

Coronavirus £10,000 business grant:

The government has also announced a £10,000 cash grant for the country's 700,000 smallest businesses which it increased from an initial £3,000.

Business Rates retail discount:

The government has also announced it will temporarily increase the Business Rates retail discount in England to 100% for 2020-21 for properties below £51,000 rateable value.

Businesses in the hospitality and leisure industry will also be eligible for up to a £25,000 grant.

Banking Working Capital support:

Some banks have begun to make dedicated funds available for firms experiencing coronavirus-related hardship.

For example, NatWest bank have announced £5bn of Working Capital Support for business that will see disruption. Lloyds Banking Group has announced £2bn of arrangement fee free finance available to support small businesses and Barclays have highlighted their 12-month capital repayment holidays and its £14bn SME lending fund.

You can find more at CBI

Statutory Sick Pay Refunds:

Refunds will be given for businesses and employers that are required to access Statutory Sick Pay (SSP)s.

3 month mortgage repayment holiday:

The Government has announced that individuals experiencing difficulty with making mortgage repayments will have a 3 month mortgage repayment holiday to provide breathing space.

Government Business Support Helpline:

You can contact the Government Business Support Helpline using the numbers below:

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Can I expense Training costs? Guide

Can I expense Training costs?

Professional development costs can be claimed as an allowable expense, as long as the course content directly relates to your trading activity.

Training courses that you attend to learn a new skill-which you can use to expand into a new industry or offer different services-aren't allowable, unless you can show that these courses are helping you build up on your existing skills or knowledge.

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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5 Common Small Business Accounting Mistakes & How to Fix Them Guide

5 Common Small Business Accounting Mistakes & How to Fix Them

A broad swath of small business owners are tackling the myriad tasks required to pay bills, invoice customers, cut checks to employees and contend with past-due accounts, among other accounting tasks.

While that might work for very small businesses, it often opens the door for firms to make accounting mistakes that undermine their growth and siphon precious time and mental focus from other important areas of their business.

Here are five accounting mistakes that can derail growth for small businesses and how to avoid them.

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Can I expense Business gifts? Guide

Can I expense Business gifts?

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Can I expense Computer purchases? Guide

Can I expense Computer purchases?

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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 claim using the cycle to work scheme? Guide

Can I claim using the cycle to work scheme?

Employers who purchase bicycles and safety equipment for loan to employees can benefit from treating the purchase as capital expenditure eligible for corporation tax relief. VAT can also be claimed back on the purchase unless you are registered on the VAT flat rate scheme.

The loan of bicycles and safety equipment under the cycle to work scheme removes any tax charge to the employee that would usually arise on a taxable benefit.

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Can I expense Pensions? Guide

Can I expense Pensions?

As a sole trader, you can't claim pension contributions as a deductible expense. However, you can get personal tax relief from contributions you make into your pension scheme.

If you're a limited company director, you have the option of making pension contributions through your company. This will reduce your company's profits, and as such reduce the amount of corporation tax your company pays.

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 contractors reclaim insurance costs? Guide

Can contractors reclaim insurance costs?

Business insurance costs can be reclaimed through your business and are eligible for Corporation Tax relief.

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Are there any penalties for delivering Company Accounts late? Guide

Are there any penalties for delivering Company Accounts late?

The following penalties for private limited companies will be imposed if you fail to file your accounts with Companies House on time:

  • Up to 1 month late: £150
  • 1 - 3 months late: £375
  • 3 - 6 months late: £750
  • More than 6 months late: £1,500
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Can I expense Computer equipment? Guide

Can I expense Computer equipment?

Yes, you can claim the purchase of computers as a deductible 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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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 Christmas gifts for staff? Guide

Can I expense Christmas gifts for staff?

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Bookkeeping vs Accounting Differences Guide

Bookkeeping vs Accounting Differences

As a small business owner, having a good grasp of your business financials is key-even if you've hired an accountant.

While you can delegate your accounting tasks, understanding the basics will place you in a better position when it comes to discussing your business finances with your team members, financial professionals or potential investors.

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Previously, we've explained about the top accounting terms and concepts you need to know. In today's post, we'll explain the differences between bookkeeping and accounting. While these two terms are often used interchangeably, they refer to two vastly distinct functions and roles.

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Can I expense Hotels and bed & breakfasts? Guide

Can I expense Hotels and bed & breakfasts?

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Can I expense Social Media Ads or Marketing Costs? Guide

Can I expense Social Media Ads or Marketing Costs?

Yes, you can claim the costs of social media ads as a deductible 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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Do I need to retain expense receipts? Guide

Do I need to retain expense receipts?

You need to keep your receipts for expenses for at least five years after the 31 January submission deadline for the relevant tax year.

It helps to minimise paperwork wherever possible, so we recommend taking a picture of your receipts and storing these images away digitally. You can use cloud storage platforms like Dropbox or an expenses app like Expensify.

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Can I expense Childcare vouchers? Guide

Can I expense Childcare vouchers?

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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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Can I expense a Laptop? Guide

Can I expense a Laptop?

The portability of a laptop brings in a layer of complexity, as they tend to be purchased for both business and personal use. You can claim it as an expense, but you will need to apportion between business and personal use.

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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iPhone calendar to keep track of tax returns deadlines
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Limited Company Expenses Guide