4 ways the new budget affects you Mar 4, 2021Views: 202
So yesterday, after weeks of whispers on the grapevine and speculations in the press, the Chancellor Rishi Sunak finally unveiled his much anticipated budget. Obviously the past year has been unprecedented in terms of impacts to businesses and livelihoods so people have been on tenterhooks waiting to see what measures are being put in place to alleviate the pinch we've all felt. But amidst all the jargon and the Mr Speaker this, Mr Speaker that, how does the new budget affect YOU - the normal everyday (and no doubt very attractive and funny) businessperson.
(1) Clearly furlough was top of everyone’s list. With the roadmap to exit lockdown set to end on June 21st, the furlough scheme has been extended all the way to September. No this doesn't mean that lockdown might last until then also, it simply means more time is being given to businesses for the economy to bounce back and to help reduce redundancies. Hopefully by September it will be back to some semblance of normality. Furlough will stay at 80% of employees’ wages for hours they cannot work which is welcome news. From July onwards, employers will also be expected to contribute to a percentage of their employees’ wages.
(2) When it comes to the self-employed however it is not business as usual (if you will pardon the pun). From next month, a fourth grant will be available to eligible applicants worth 80% of three month’s average trading profits capped at £7,500. A fifth grant will also be available from May but with this particular grant the amount paid will depend on the amount of turnover lost. So those businesses whose turnover has fallen by less than 30% will only receive a grant that is equal to 30% of average trading profits. In good news though, those who can provide tax returns that show they were trading in 2019-20 will be eligible now for the fourth and fifth grants. This means that some 600,000 more people will now be eligible to claim.
(3) One of the biggest announcements was the increase in corporation tax to 25% in 2023 which hopes to bring in billions of additional revenue for the Treasury. However, small businesses with profits of £50,000 or less will remain at the current rate of 19% meaning around 70% of UK businesses will be unaffected. Only companies with profits of more than £250,000 will be taxed at the full rate of 25%.
(4) Although income tax is not rising (big PHEW), the tax bill that people may face in the future could go up. Currently, if you earn over £12,500 then you pay 20% income tax and 40% if you earn over £50,000. These thresholds will go up to £12,570 and £50,270 in April and will be frozen until April 2026. Read more about the new Income Tax thresholds here.
In other news, 5% deposits for mortgages are back for properties worth up to £600,000. The stamp duty holiday has been extended until 30 June (it was due to end in March) which means no stamp duty will be paid on the first £500,000 of a property purchase. This will reduce to the first £250,000 until the end of September, And finally, all duties on wine and beer will remain frozen for another year. And if that is not an excuse to pour yourself a nice big glass of wine, I don’t know what is!
For a full list of all measures announced by the Chancellor today head to the GOV.UK website.
Written by Aoibheann Byrne | BrightPay Payroll Software
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