The budget is the big set piece of the government’s finances and the impact of the 2021 budget for small businesses was highly anticipated. It has been seen as a key moment for setting the direction of the economy following both the pandemic and the implementation of Brexit.
The reaction from the small buiness sector
The reaction from the small busienss sector to the annual ‘set piece’ of the government finances – the budget has been mixed.
The chair of the Federation of Small Businesses summed up by saying: “This Budget will help many small firms with their final push through to September, but there is little here to aid job creation or help people return to work.”
What was in the budget for small businesses?
The areas that the 2021 will benefit or affect small businesses are particularly aimed at employers and there is also some sector specific support. For the self employed a lot depends on the status of your work.
- The coronavirus Job Support Scheme (furlough) will continue until the end of September. Employers will contribute 10% of wages in July and 20% in August and September.
- An increase to the National Living Wage to £8.91 per hour from April.
- Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs from the government.
- If your business runs a shop or café you may be eligible for a Restart Grant. This is up to £6,000 per premises for nonessential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
- The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. They will follow this with 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business. If your business has a premises that isn’t eligible, check with your local authority whether they will be offering any support on a discretionary basis.
- Personal tax allowance and higher rate of income tax rates fixed from April 2022 until April 2026, once inflation is taken into account this is effectively a tax rise for workers.
- 25% rate of corporation tax from 2023 for businesses with profits over £250,000 and a tapered rate for those with profits between £50,000 and £250,000.
- A super deduction from tax on capital investment for next two tax years
- The extension of the Self-Employment Income support scheme which is now available to some of the more recently self employed
If you are involved in a charity you may be interested in this companion blog post on the budget from a small business perspective.
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