COVID reliefs
Coronavirus Job Retention Scheme (CJRS) – CJRS (the furlough scheme) is extended until the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked. No employer contributions are required (apart from National Insurance contributions (NICs) and pensions) in April-June. From July, employers will be required to make a contribution towards the cost of unworked hours. This will be 10% in July, 20% in August and 20% in September.
Self-Employment Income Support Scheme (SEISS) grants – The fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April, and can be claimed from late April. Self-employed individuals must have filed a 2019- 20 Self Assessment tax return to be eligible for the fourth grant. There will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, People whose turnover has fallen by 30% or more will continue to receive a grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.
Income tax exemptions for COVID-19 tests and home office expenses – The income tax exemption and NICs disregard for COVID-19 antigen tests provided by, or reimbursed by, employers, and for employer reimbursed expenses covering the cost of home office equipment, is extended to the 2021-22 tax year.
Recovery Loan Scheme – From 6 April 2021 the Recovery Loan Scheme will provide
lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million.
Restart Grants – ‘Restart Grants’ will be provided in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses
Statutory Sick Pay (SSP) Rebate Scheme – Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee.
VAT Deferral New Payment Scheme – Any business that took advantage of the
original VAT deferral on VAT returns from 20 March to 30 June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
VAT reduction for the UK’s tourism and hospitality sector – The temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector is extended until 30 September 2021. To transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
Business rates reliefs – Eligible retail, hospitality and leisure properties in England will continue to receive 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
Temporary Stamp Duty Land Tax (SDLT) cut – The temporary increase in the residential SDLT Nil Rate Band to £500,000 in England and Northern Ireland is extended until 30 June 2021. From 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.In Scotland and Wales the equivalent taxes are administered by the devolved administrations.
Business tax
Corporation tax – The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be taper relief for businesses with profits between £50,000 and £250,000, so that their average rate is less than the main rate. In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023.
Extended loss carry back for businesses – The trading loss carry-back rule will be temporarily extended from one year to three years. This will be available for both incorporated and unincorporated businesses.
- Unincorporated businesses and companies that are not members of a group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22;.
- Companies that are members of a group will be able to obtain relief for up to £200,000 of losses in each of 2020-21 and 2021-22 without any group limitations;
- Companies that are members of a group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22, but subject to a £2 million cap across the group as a whole
This will be legislated in the forthcoming Finance Bill.
Super-deduction for plant and machinery – From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate assets.
Freeports - Businesses in Freeport tax sites will be able to benefit from a number of tax reliefs:
- An enhanced 10% rate of Structures and Buildings Allowance for constructing or renovating non-residential structures and buildings within Freeport tax sites. To qualify, the structure or building must be brought into use on or before 30 September 2026.
- An enhanced capital allowance of 100% for companies investing in plant and machinery for use in Freeport tax sites.This will apply to both main and special rate assets, and will remain available until 30 September 2026.
- Full relief from Stamp Duty Land Tax on the purchase of land or property within Freeport tax sites in England. Land or property must be purchased and used for a qualifying commercial purpose. The relief will be available until 30 September 2026.
- Full Business Rates relief in Freeport tax sites in England. Relief will be available to all new businesses, and certain existing businesses where they expand, until 30 September 2026. Relief will apply for five years from the point at which each beneficiary first receives relief.
- Employer National Insurance contributions relief for eligible employees in all Freeport tax sites from April 2022 (or when a tax site is designated if after this date). This would be available until at least April 2026 with the intention to extend for up to a further five years to April 2031, subject to a review of the relief.
Making payments of interest or royalties to connected companies in the EU - Legislation in Finance Bill 2021 will repeal the domestic legislation that gives effect to the EU Interest and Royalties Directive. The legislation currently provides an exemption from withholding tax on intra-group interest and royalty payments between UK and EU companies. Repeal will mean that from 1 June 2021 withholding taxes will apply to payments of annual interest and royalties made to EU companies subject to the terms of the relevant double taxation agreement.
R&D tax relief schemes - A consultation has been published, with the stated objective of ensuring the UK remains a competitive location for cutting edge research, that the reliefs continue to be fit for purpose and that taxpayer money is effectively targeted. In addition, the government proposes bringing data and cloud computing costs into the scope of relief alongside a number of other policy options and priorities at the wider review.
Bank Surcharge – This will be reviewed to make sure ensure that the combined rate of tax on banks’ profits does not increase substantially from its current level, that rates of taxation here are competitive with the UK’s major competitors in the US and the EU, and that the UK tax system is supportive of competition in the UK banking sector. Changes will be legislated in Finance Bill 2021-22.
Personal tax
Personal Allowance and higher rate threshold (HRT) – The income tax Personal Allowance will rise in line with Consumer Price Index (CPI) to £12,570 from April 2021 and will remain frozen at this level until April 2026. The income tax HRT will rise to £50,270 from April 2021 and will remain frozen at this level until April 2026.
Inheritance tax nil-rate band and residence nil-rate band – The inheritance tax nil-rate bands will remain at existing levels until April 2026.
Capital Gains Tax Annual Exempt Amount (AEA) – The value of gains that a taxpayer can realise before paying Capital Gains Tax, the AEA, will be maintained at the present level until April 2026. There were no further announcements on CGT rates.
Pensions Lifetime Allowance – The government will maintain the Lifetime Allowance at its current level until April 2026.
Starting rate for savings tax band – The band of savings income that is subject to the 0% starting tax rate will remain at its current level for 2021-22.
Individual Savings Account (ISA) annual subscription limit – The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.
Avoidance, evasion and non-compliance
Combatting COVID-19 fraud – over £100 million will be invested in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud within COVID-19 support packages, including the CJRS and SEISS. In addition, the government will strengthen law enforcement for Bounce Back Loans.
Interest harmonisation and reform of penalties for late submission and late payment of tax – The Government will reform the penalty regime for VAT and Income Tax Self Assessment. The new late submission regime will be points-based, and a financial penalty will only be issued when the relevant threshold is reached.
OECD reporting rules for digital platforms – A consultation will be launched on the implementation of OECD rules that will require digital platforms to send information about the income of their sellers to both HMRC and the seller themselves.
OECD Mandatory Disclosure Rules – A consultation will be launched on replacing the existing EU Disclosure rules with OECD rules to combat offshore tax evasion by facilitating global exchange of information on certain cross-border tax arrangements.
Other provisions
High quality traineeships for young people – Additional funding of £126 million will be provided in England for high quality work placements and training for 16-24 year olds in the 2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
Payments for employers who hire new apprentices – Employers in England who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.
Review of tax administration for large businesses – A review will be undertaken looking at large businesses’ experiences of UK tax administration, including the degree to which it provides businesses with early certainty where appropriate, ensures the efficient resolution of disputes, and promotes a collaborative and constructive approach to compliance.
High-skilled migration – The immigration system is to be modernised to help the UK attract and retain talent – particularly in academia, science, research and technology – from around the world.
Enterprise management incentives (EMI): call for evidence – This will consider whether and how more UK companies should be able to access EMI to help them recruit and retain the talent they need to scale up.
Indirect taxes & Duties
VAT threshold – The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022.
Aggregates Levy – The Aggregates Levy rate for 2021-22 is frozen but will return to index-linking in future.
Fuel Duty – Fuel duty remains frozen in 2021-22.
Air Passenger Duty (APD) – The reduced and standard short-haul rates will remain frozen. The rates for long-haul economy flights from Great Britain will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £5. Those travelling long-haul by private jets will see the rate increase by £13.
Vehicle Excise Duty (VED) – VED rates for cars, vans and motorcycles will be increased in line with RPI from 1 April 2021.
VED and Levy rates for heavy goods vehicles (HGVs) – HGV VED will be frozen for 2021-22 and the HGV Levy is suspended for another 12 months from August 2021.
Company vehicles – From 6 April 2021, fuel benefit charges and the van benefit charge will increase in line with CPI.
Alcohol duty – the duty rates on beer, cider, wine and spirits will be frozen for another year.
Gaming duty – The government will legislate in Finance Bill 2021 to raise the Gross Gaming Yield bandings for gaming duty in line with RPI.
