UK Budget 2021 in Regards to Covid Response

The Chancellor began his address by emphasising the government’s support for the economy before announcing the continuation of several of the initiatives until later this year, perhaps when the restrictions are lifted. To avoid any “cliff edge” circumstances, the assistance is being tapered away.

Businesses should be able to plan for their reopening with the confidence that this provides. The total cost of the support is projected to be £407 billion, and the Chancellor, predictably, addressed how he wants to begin rebalancing the books later in his speech.

Job Retention Program

The Coronavirus Job Retention Scheme (CJRS), which had been set to expire in April 2021, has been extended until September 2021. Until June 2021, the scheme will continue to give the same level of assistance. Starting in July, the government will establish a 10% employer contribution to the cost of unworked hours in July, 20% in August, and 20% in September. Employees will continue to receive 80% of their current income for hours not worked, limited at £2,500 per month. Employer contributions are intended to reflect the fact that the economy is likely to improve at that point.

Self-employed

The Self-Employment Income Support Scheme (SEISS) will offer a fourth and fifth grant. The grants’ eligibility and calculation will become more difficult.

The fourth award will be available for claim from February to April 2021 and will be paid out in late April 2021, with the fifth grant available from July to September. The fourth grant is set at £7,500 and is computed at 80% of three months of their average business and partnership income over the previous four years. Or at 30% and a maximum of £2,850.

Because these individuals have now filed a 2019-20 Self-Assessment tax return, it is projected that 600,000 additional people would be newly eligible for SEISS.

Business Rates:

1. The legislation will be introduced to ensure that the business rates relief repayments that certain businesses have made are deductible for corporation tax and income tax purposes to ensure that these businesses are worst from a tax perspective than if they had paid the business rates in the first place.
2. Business rates Businesses occupying eligible retail, hospitality and leisure properties and nurseries in England will be granted a 100% business rates discount for 3 months from April 1 2021.
3. For the remainder of the financial year, these properties will receive a 66% discount with a cap of £2 million per business for those required to close as of January 5, 2021, and a cap of £105,000 per business for those that were not needed to complete.

Recovery Loan Program

From April 6, 2021, the Recovery Loan Scheme will provide lenders with an 80% guarantee on qualified loans between £25,000 and £10 million, allowing them to continue lending to UK firms confidently. All firms, including those who have already received support via the existing COVID-19 guaranteed loan agreements, will be eligible to participate in the initiative.

The Treasury has been chastised for the support packages’ design, which includes their vulnerability to fraud. The government will spend over £100 million on a 1,265-strong HMRC Taxpayer Protection Taskforce to counter this threat. This is one of HMRC’s most significant reactions to fraud risk. In addition, the government has declared that it would increase public knowledge of enforcement actions to combat fraud and that law enforcement for Bounce Back Loans will be greatly strengthened. The support schemes can be difficult to implement, and as the projects go away, the complexity will increase. Businesses must ensure that they are fully aware of and comply with the rules to cope with any situation.

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