More has been disclosed, leaked, of this year’s Budget announcements than in previous years. But we now have the details and there is a lot to consider. The following Budget summary is split into four sections:
1. COVID-19 related support measures for UK businesses
2. Support for the UK housing market
3. Taxation changes
4. Other announcements
Please call if you need to discuss how these changes may affect your business or tax affairs in the coming months.
COVID-19 related support measures for UK businesses
The Treasury is to continue the two existing major support schemes in an attempt to hold back a significant increase in unemployment rates as business owners grapple with the effects of COVID-19 disruption. Details are set out below.
Coronavirus Job Retention Scheme
This scheme, nicknamed the Furlough Scheme, was due to end 30 April 2021. It is now being extended to 30 September 2021.
The judgement must be that there will be enough control over COVID by autumn 2021 to stimulate demand and give employers more confidence to retain staff. The Chancellor has obviously crunched the numbers and considers employment support in this way a more attractive strategy than increasing unemployment costs.
In more detail:
• For employees, there will be no change to the terms – they will continue to receive up to 80% of their salary, for hours not worked, until the scheme ends.
• Employers will be asked to contribute 10% towards wages for hours not worked from July 2021, rising to 20% in August and September 2021.
Self-Employed Income Support Scheme (SEISS)
There has been much criticism of this scheme as it has not been possible for self-employed businesses that commenced trading during 2019-20 to claim.
To counter this, the following changes to SEISS have been announced.
1. All qualifying self-employed businesses can continue to claim SEISS grants if they continue to be adversely affected by COVID lockdown measures. The present scheme was due to end 30 April 2021. This has now been extended to 30 September 2021.
2. Businesses previously excluded from claims because they commenced during the 2019-20 tax year will now be eligible to claim the fourth and fifth SEISS grants as long as their tax return for 2019-20 was filed by midnight 2 March 2021.
3. For the fifth grant claims can be made from July 2021. Self-employed persons whose turnover has fallen by more than 30% will continue to qualify for the 80% grant. Those with decreases in turnover of less than 30% will be restricted to a 30% claim.
Restart grants
£5bn of funding is being allocated for these grants. They will support businesses obliged to close during much of lockdown. The grants will consist of:
• A one-off grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
• Non-essential retail that have tended to open first, can apply for a one-off £6,000 grant.
Business rates holiday continued
This year, government will continue with the 100% business rates holiday for the first three months of the 2021-22 financial year, in other words, through to the end of June 2021 for the retail, leisure and hospitality sectors.
For the remaining nine months of the year, to 31 March 2022, business rates will still be discounted by two thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.
Exemption for COVID-19 related home office expenses
The temporary Income Tax exemption and Class 1 National Insurance Contributions disregard for employer reimbursed expenses that cover the cost of relevant home office equipment is extended and will have effect until 5 April 2022.
Exemption for reimbursement of antigen test costs
The government will legislate in Finance Bill 2021 to introduce a retrospective Income Tax exemption for payments that an employer makes to an employee to reimburse for the cost of a relevant coronavirus antigen test for the tax year 2020-21.
A new Recovery Loan Scheme
The Recovery Loan Scheme ensures businesses of any size can continue to access loans and other kinds of finance between £25,000 and up to £10 million per business once the existing COVID-19 loan schemes close. This will provide further support as businesses recover and grow following the disruption of the pandemic and the end of the transition period.
Once received, the finance can be used for any legitimate business purpose, including growth and investment.
The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.
The scheme launches on 6 April 2021 and is open until 31 December 2021, subject to review. Loans will be available through a network of accredited lenders.
Reduced rate of VAT
The temporary reduced rate of 5% for hospitality, holiday accommodation and attractions will be extended until 30 September 2021. This is a welcome bonus for this sector badly affected by COVID lockdown restrictions.
This will be followed by the introduction of a new reduced rate of 12.5% from 1 October 2021 that will be in effect until 31 March 2022 at which point it will revert to the 20% standard rate.
Other support measures
Other measures outlined in the Budget include:
• Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
• £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
• Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021-22 academic year.
Support for the UK housing market
Support will include a mortgage guarantee scheme that will help home buyers purchase properties up to £600,000, and an extension to the existing stamp duty holiday that was due to end 31 March 2021.
The detail:
Mortgage guarantee scheme
The government will underwrite 95% of the risk of default. It will apply to home acquisitions up to £600,000 and set deposits required to 5%.
Stamp duty holiday
The present £500,000 threshold for paying Stamp Duty Land Tax (SDLT) was increased on a temporary basis and was due to end 31 March 2021.
The nil rate band will continue to be £500,000 for the period 8 July 2020 to 30 June 2021. From 1 July 2021 until 30 September 2021, the nil rate band will be £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021. This applies to England and Northern Ireland only. The devolved administrations have not announced any further extension beyond 31 March 2021 when this summary was written on Budget Day.
Non-resident SDLT
A 2% SDLT surcharge, above existing rates, for non-UK residents purchasing residential property in England and Northern Ireland is to be introduced from 1 April 2021. 
Taxation changes
Many of the tax changes announced are for a fixed period, generally, from April 2021 to April 2026. This does provide welcome certainty for businesses. Announcements made include:
Income Tax 2021-22 to 2025-26
The basic rate threshold is increasing to £37,700 for 2021-22 (2020-21: £37,500) and then frozen until April 2026. For the same period, the personal tax allowance is set at £12,570 (2020-21: £12,500) and will apply to all regions of the UK.
Taxpayers who will benefit from annual increases in their earnings up to April 2026 may find themselves paying tax at the higher rates if these increases breach the £37,700 annual basic rate limit.
Regional variations to Income Tax rates apply in Scotland and may apply in Wales.
National Insurance
NIC Upper Earnings limits and Upper Profits limits will also remain at a fixed amount until April 2026 and will be based on the Income Tax higher rate threshold of £50,270.
Starting rate for savings
The band of savings income that is subject to the 0% starting rate will remain at £5,000 for 2021-22.
Lifetime Allowance for pension pots
From April 2021 to April 2026 the pensions lifetime allowance will be frozen at £1,073,100.
Cycle to work scheme change
The government will legislate in Finance Bill 2021 to introduce a time-limited easement to the employer-provided cycle exemption to disapply the condition which states that employer-provided cycles must be used mainly for journeys to, from, or during work. The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020.
The change will have effect on and after Royal Assent of Finance Bill 2021 and be in place until 5 April 2022, after which the normal rules of the exemption will apply.
Van benefits for zero carbon emissions
The government will legislate in Finance Bill 2021 to reduce the van benefit charge to zero for vans that produce zero carbon emissions. The change will have effect on and after 6 April 2021.
Capital Gains Tax
Any attempt to align CGT rates with Income Tax rates seems to be off the table for the time being. Apart from anti-avoidance changes, the only announcement on this tax that has general relevance is capping the annual exempt amount. This will be fixed at £12,300 from April 2021 to April 2026 for individuals, personal representatives and some types of trusts for disabled people; and £6,150 for trustees of most settlements.
Corporation Tax
As expected, there will be increases in Corporation Tax, but not yet and only for larger companies. Company owners will be relieved that there are no imminent increases in CT rates until April 2023.
From 1 April 2023, there will be two rates of CT.
• Taxable profits up £50,000 will continue to be taxed at 19% under the new Small Business Profits Rate
• Taxable profits in excess of £250,000 will be taxed at 25%
• Profits between £50,000 and £250,000 will be subject to a marginal tapering relief. This would be reduced for the number of associated companies and for short accounting periods.
Carry back of trading losses
The present provisions that restrict the carry back of tax losses is being relaxed, temporarily, extending the period over which incorporated and unincorporated businesses may carry-back trading losses from one year to three years.
This extension will apply to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020-21 and 2021-22 by unincorporated businesses. The £2,000,000 maximum applies separately to unused trading losses made by incorporated companies, after carry-back to the preceding year, in relevant accounting periods ending between 1 April 2020 and 31 March 2021 and a separate maximum of £2,000,000 for periods ending between 1 April 2021 and 31 March 2022.
The £2,000,000 cap will be subject to a group-level limit, requiring groups with companies that have capacity to carry back losses in excess of £200,000 to apportion the cap between its companies. Further detail on the group limit will be published in due course.
R&D tax credit cap to be introduced
For accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D tax credit that a company can receive in any one year will be capped at £20,000 plus three times the company’s total PAYE and National Insurance Contributions liability, in order to deter abuse.
Enterprise Management Incentives
As announced on 21 July 2020, the government will legislate in Finance Bill 2021 to extend the time-limited exception that ensures that employees who are furloughed or working reduced hours because of coronavirus (COVID-19) continue to meet the working time requirements for EMI schemes.
The change will apply to existing participants of EMI schemes and it also allows employers to issue new EMI options to employees who do not meet the working time requirement as a result of COVID-19. This measure will have effect until 5 April 2022.
Major new investment reliefs
A new “super-deduction” and a 50% first year allowance are to be introduced that will allow businesses to increase the tax relief they can claim for qualifying investments in plant and other equipment. It will apply to expenditure between 1 April 2021 and 31 March 2023.
The super-deduction will mean that assets will qualify for tax relief based on 130% of the actual cost of expenditure incurred.
Assets that qualify for the special rate relief will qualify for the 50% first year allowance.
The existing Annual Investment Allowance £1m limit will continue to be available until 31 December 2021.
Freeports
In an attempt to reposition the UK as a global player a raft of tax incentives are to be provided to the eight freeport locations in England announced in the Budget. They will include enhanced structures and buildings allowances.
Inheritance Tax
No changes in the present rates and allowances that are all frozen at current levels until April 2026.
This means the nil-rate band will be £325,000 and the residence nil-rate band at £175,000 for this period.
VAT
There be no changes to the standard 20% rate.
The £85,000 registration limit and the £83,000 deregistration limit will be frozen until 31 March 2024.
Other announcements
Universal Credits
The recent increase in benefits of £20 per week is to be extended for a further six months.
Working Tax Credit claimants will receive equivalent support via a £500 one off payment.
Duties
There will be no increases in duty on alcoholic drinks or fuel.
Vehicle excise duties will see a small increase in line with the Retail Prices Index (RPI).
Air Passenger Duty long haul rates will also increase in line with RPI as will gaming duty and Landfill Tax.
ISA investment limits for 2021-22
The limits set for 2021-22 are:
• Adult ISAs the limit remains at £20,000
• Junior ISA limit remains at £9,000
• Child Trust Funds remain unchanged at £9,000
National Living Wage increase
The NLW will increase to £8.91 per hour from 1 April 2021.
VISA reforms
There will also be new reforms to the immigration system that will help ambitious UK businesses entice top talent. These reforms will include a new unsponsored points-based visa to attract highly skilled migrants and a new, improved visa process for scale-ups and entrepreneurs.
Help to Grow schemes
Two new Help to Grow schemes are set to launch by the autumn to help support 130,000 small and medium sized businesses. The Help to Grow: Management scheme will help small and medium sized businesses get world-class management training with the government contributing 90% of the cost.
In addition, the Help to Grow: Digital scheme will help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each.
Single contactless payments
Our final comment on the Budget seems to anticipate a coming consumer spending bonanza. The legal limit for single, contactless payments is increasing from £45 to £100.

1 March 2021 – Due date for Corporation Tax due for the year ended 31 May 2020.
2 March 2021 – Self-assessment tax for 2019/20 paid after this date will incur a 5% surcharge.
19 March 2021 – PAYE and NIC deductions due for month ended 5 March 2021. (If you pay your tax electronically the due date is 22 March 2021)
19 March 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2021.
19 March 2021 – CIS tax deducted for the month ended 5 March 2021 is payable by today.
1 April 2021 – Due date for Corporation Tax due for the year ended 30 June 2020.
19 April 2021 – PAYE and NIC deductions due for month ended 5 April 2021. (If you pay your tax electronically the due date is 22 April 2021)
19 April 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2021.
19 April 2021 – CIS tax deducted for the month ended 5 April 2021 is payable by today.
30 April 2021 – 2019-20 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.

You can make a simplified declaration before you export your goods. This is called ‘presenting’ your goods to customs.
The first part of your declaration does not need as much information as a full declaration. When it’s approved, you can export your goods or move them from your premises.
You will still need to give customs more information, but you send it later in a supplementary declaration. You need to do this within 14 days of your goods departing the UK.
You cannot make simplified declarations for goods:
• covered by the Common Agricultural Policy
• subject to export licensing (exceptions apply)
• subject to excise duty (exceptions apply)
• that require a full customs declaration
Simplified declarations cannot be used if goods are entered into a special procedure using authorisation by declaration. Some controlled goods can be exported using simplified procedures, but you will need to include extra information in your declaration.
The process
The first part of this declaration is where you submit basic details of your export to customs. In most cases, you submit this electronically using the National Export System. You will need to present your goods and declaration at a port or airport. Simplified declaration procedures can also be presented at a designated export place. A designated export place is an inland location approved by customs.
When your goods are cleared, you can usually then load and ship them without needing to present any supporting documents. Supporting documents may be needed for some controlled goods which are prohibited or restricted. You’ll still need to give customs more information, but you send it later in a supplementary declaration.

From April 2021, the National Living Wage (NLW) will be the statutory minimum wage for workers aged 23 and over. It currently applies to workers aged 25 and over. The reduction in the NLW age threshold follows a review of the structure of the National Minimum Wage youth rates and recommendations made by the Low Paid Commission in autumn 2019. The threshold will further reduce to 21 by 2024.
The published rates for 2020-21 are:
National Living Wage £8.91
21-22 Year Old Rate £8.36
18-20 Year Old Rate £6.56
16-17 Year Old Rate £4.62
Apprentice Rate £4.30
Accommodation Offset £8.36

HMRC published the following press release on Valentine’s Day 2021.
HMRC is encouraging married couples and people in civil partnerships to sign up for a tax break this year.
Marriage Allowance offers individuals the chance to transfer part of their Personal Allowance to their husband, wife or civil partner, which could reduce their tax by up to £250 a year. For some couples, this could mean a backdated payment of up to four years of claims which could be as much as £1,188.
It is free to apply for Marriage Allowance and HMRC is encouraging customers to claim directly through its online portal to ensure they receive 100% of the tax relief they are eligible for.
For the tax year 2020-21, the Marriage Allowance lets people earning £12,500 or less transfer up to £1,250 of their Personal Allowance to their husband, wife or civil partner – if their income is higher and they are a basic rate taxpayer. This will reduce their tax by up to £250 for the 2020-21 tax year. Claims can also be backdated to April 2016 until 5 April 2021. After 6 April 2021, couples will only be able to claim back to the 2017-18 tax year.
The same criteria apply to married couples and civil partnerships in Scotland, except their partner must pay Income Tax at the starter, basic or intermediate rates between £12,501 and £43,430.
The Personal Allowance rate for the 2021-22 tax year is increasing to £12,570.
To claim, search the GOV.UK website for Marriage Allowance.
Marriage Allowance claims are automatically renewed every year. However, couples should notify HMRC if their circumstances change.

Employed persons
If your employer requires that you work from home, this will apply to many employees during the various COVID lock-down periods, HMRC will allow you to claim for any extra costs associated with working from home.
To save you calculating what these extra costs might be, HMRC has agreed a claim based on their estimate of the average extra costs you may experience if working from home.
The choices you have are therefore:

• £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
• the exact amount of extra costs you’ve incurred above the weekly amount – you will need evidence such as receipts, bills or contracts
You will get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).
Additional costs include things like heating, metered water bills, home contents insurance, business calls or a new broadband connection. They do not include costs that would stay the same whether you were working at home or in an office, such as mortgage interest, rent or council tax.
You cannot claim tax relief if you choose to work from home.
Self-employed persons
If your self-employment takes up more than 25 hours a month you could claim based on the following agreed flat rates per month or as above, you could work out the additional costs and claim those. The HMRC agreed rates for the self-employed are:
Hours of business use per month Flat rate per month
25 to 50 £10
51 to 100 £18
101 and more £26

1 February 2021 – Due date for Corporation Tax payable for the year ended 30 April 2020.

19 February 2021 – PAYE and NIC deductions due for month ended 5 February 2021. (If you pay your tax electronically the due date is 22 February 2021)

19 February 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2021.

19 February 2021 – CIS tax deducted for the month ended 5 February 2021 is payable by today.

1 March 2021 – Due date for Corporation Tax due for the year ended 31 May 2020.

2 March 2021 – Self assessment tax for 2019/20 paid after this date will incur a 5% surcharge.

19 March 2021 – PAYE and NIC deductions due for month ended 5 March 2021. (If you pay your tax electronically the due date is 22 March 2021)

19 March 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2021.

19 March 2021 – CIS tax deducted for the month ended 5 March 2021 is payable by today.

Contractors and subcontractors registered for VAT and the Construction Industry Scheme will need to use the VAT reverse charge process for building and construction services from 1 March 2021.

VAT registered subcontractors affected by this change will no longer add VAT to their invoices to contractors. Instead, the contractors’ accounting system will need to add the deemed VAT to their VAT return on behalf of subcontractors, and at the same time, deduct the same amount as input VAT on the same return.

This will sound complicated but most accounting software can cope with the entries required. If you need help to set this up please call.

Contractors will only pay their VAT registered subcontractors the VAT-free amount invoiced, and as the reverse charge adjustment increases both input and output VAT by the same amount there is no cash penalty for either party.

This new process only applies to certain types of services provided by subcontractors.

Please check with us if you feel you are affected but don’t know how to make or judge what you need to do.

If you have bookkeeping software that can be adapted to deal with this change then once appropriate changes are made, processing subcontractors’ invoices should be no more difficult than before the change to the reverse charge.

At first sight, company cars drivers whose private fuel costs are met by their employers may seem to be onto a good thing, but there is a nasty tax hit…

Enter, the Car Fuel Benefit charge.

When the current tax year ends, 5 April 2021, the illustration below demonstrates how a cash payment to an employer to payback any private fuel provided can create overall cash savings. This will not apply to all company car drivers, but it is well worth checking to see if a repayment is possible.

Let’s say the following circumstances apply:

• list price of your company car when new was £30,000
• your employer pays for all your private fuel
• CO2 emissions are 147 g/km, and
• the car has a diesel engine, 2000 cc.

The 2020-21 benefit in kind charge for the use of the car (this is added to your taxable income for the year) is £10,200. This would cost a standard rate taxpayer £170 a month in Income Tax.
But then the provision of private fuel would trigger an additional Car Fuel Benefit charge of £8,330. This would cost a standard rate taxpayer an extra £138 a month.

As the title of this article suggests, it is possible to reimburse your employer for private fuel provided and avoid this Car Fuel Benefit charge completely. Here’s what you would need to do:

• First of all, calculate your private mileage for the 2020-21 tax year. Estimates won’t do, you will need to create evidence, a mileage log for example.
• Multiply this private mileage by HMRC’s Advisory Fuel Rate. The present rate per mile for a 2000 cc diesel car is 10p.

Armed with this information you can now do the sums. In the above example, if the driver’s private mileage was 5,000 miles during 2020-21, the amount that needs to be repaid to the employer is £500. That’s just £42 per month.

Which means, for an effective outlay of £500, the car driver – if a basic rate tax payer – will save £1,666 in tax (£8,330 x 20%). That’s an overall cash saving of £1,166.

If you are receiving private fuel from your employer, or indeed providing private fuel for your employees, it is well worth crunching the numbers to see if there is a cash advantage to repaying any private fuel.

There are deadlines to consider and we can help you with the math and the reporting processes required.

Final planning notes for employers
The car fuel benefit charge not only creates a tax charge for the employee it also creates a National Insurance charge for the employer. And so, allowing employees to repay their private fuel costs will also reduce your NIC costs. A classic win-win outcome.

If you took advantage of the offer to defer VAT payments falling due between 20 March 2020 and 30 June 2020 – to help out with the impact of COVID disruption – your now have three choices. You can:

• pay the deferred VAT in full on or before 31 March 2021
• opt in to the VAT deferral new payment scheme when it launches in 2021
• contact HMRC if you need more help to pay

If you want to opt in to the new payment scheme

You cannot opt in yet. The online opt-in process will be available in early 2021. You must opt-in yourself, we cannot do this for you. Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

The scheme will allow you to:

• pay your deferred VAT in instalments without adding interest
• select the number of instalments from 2 to 11 equal monthly payments

To use this scheme, you must:

• still have deferred VAT to pay
• be up to date with your VAT returns
• opt-in before the end of March 2021
• pay the first instalment before the end of March 2021
• be able to pay the deferred VAT by Direct Debit

If you opt-in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

Get ready to opt in to the new payment scheme

Before opting in you must:

• create your own Government Gateway account if you don’t already have one
• submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
• correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
• make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

You should also:

• pay what you can as soon as possible to allow HMRC to show the correct deferred VAT balance
• consider the number of equal instalments you’ll need, from 2 to 11 months