Budget 2021: what it means for employment, business and housing
Today’s budget announcement has been highly anticipated by business owners and individuals alike. The Government has given England a roadmap out of lockdown, so what financial measures have they put in place to help the nation get back on its feet and repair the damage caused by Covid-19?
Extension of the furlough scheme
Before March 2020, most of us didn’t know what ‘furlough’ meant, and yet one year on, The Coronavirus Job Retention Scheme has protected more than 11 million jobs.
In July 2020, the Office for Budget Responsibility (OBR) expected unemployment to peak by 7.5%, however, they now expect the figure to be closer to 6.5%.
Through the Coronavirus Job Retention Scheme, employers can furlough employees, giving them a grant of absence whilst the government pays 80% of their wages. It has been a lifeline for many of us, particularly those in the hospitality industry which has been one of the hardest hit during the pandemic.
The furlough scheme was due to end on 30th April 2021, however, Chancellor of the Exchequer, Rishi Sunak, has today announced that it is to be extended until the end of September 2021. There will be no change in terms for employees, but employers will now be expected to pay 10% towards the hours employees do not work in July, increasing to 20% in August and September.
Why has the furlough scheme been extended?
The extension of the furlough scheme has raised concern amongst those who had felt hopeful about England’s roadmap out of lockdown. However, the chancellor has said that the extension is in place to continue to help businesses and individuals as the economy opens after a challenging year.
Support for the self-employed
Self Employment Income Support Scheme (SEISS)
The fourth grant under SEISS will cover lost earnings for self-employed workers from February to the end of April 2021.
Eligible self-employed people who have lost income due to coronavirus will be able to claim 80% of their earnings each month up to £2,500.
There will be a fifth and final grant available, covering lost income for June, July and August 2021.
The Chancellor confirmed that these self-employment grants will be available for 600,000 newly self-employed workers as long as they submitted a tax return by midnight on 2nd March 2021.
For those whose turnover has fallen by 30% or more will continue to receive the full 80% grant. Workers whose turnover has fallen by less than 30% will receive a 30% grant.
To find out if you are eligible, and to apply for the grant, click here.
Contact our employment law solicitors
Our employment law solicitors advise both employers and employees in Bristol and across the South West. Whether you are seeking advice on the furlough scheme, employment contracts or any other employment or HR-related matter, call us on 0117 325 2929 or fill out our online enquiry form.
Stamp duty holiday and mortgage guarantee scheme
When the Government announced it would suspend Stamp Duty Land Tax on the first £500,000 of all property sales in England and Northern Ireland in July 2020, many home buyers, particularly first time owners, felt hope in an otherwise miserable time. It was also a welcome boost to the property market which had struggled during the first lockdown.
Many estate agents and conveyancers, like us, have had one of the busiest times on record, as people rushed to secure a new home before the stamp duty holiday ends on 31st March 2021.
However, Rishi Sunak has announced an extension of the up-to-£500,000 nil-rate band for stamp duty until 30th June 2021. This will be followed by a £250,000 nil-rate band until September 2021, before returning to the original £125,000 thereafter.
This extension means that the maximum saving of £15,000 will therefore continue until the end of June, and thereafter, until 30th September, the maximum saving will be £2,500, effectively perhaps causing the demand to save on Stamp Duty Land Tax to taper off to less demanding levels.
Estate agents and conveyancers have had to manage clients’ expectations in a busy market and the avoidance of the March cliff-edge is welcome. It remains to be seen what level of demand there is post-March as a great many buyers will have already made their push to move within the original time frame.
Mortgage guarantee scheme
A mortgage guarantee scheme will help home buyers purchase properties worth up to £600,000 with a deposit of just 5% with the government underwriting the other 95%. Many of the big lenders are set to take part in this from April 2021, with others expected to follow later on.
Thinking of buying or selling?
Our team of residential conveyancing solicitors can take the stress and worry out of buying, selling or remortgaging your home. For a no-obligation conveyancing quote, simply fill out this short form. Alternatively, call us on 0117 325 2929 to speak to a member of our team.
Further support for businesses
Business rates holiday
Aside from the extension to the furlough scheme, which will help business owners to get back on track whilst retaining their staff, Rishi Sunak has confirmed that the business rates holiday will be extended until 30th June 2021 to help the hardest hit businesses, including retail, leisure and hospitality, during the pandemic.
The 5% reduced VAT rate for hospitality and tourism will also be extended, until 30th September 2021, followed by an interim rate of 12.5% lasting until April 2022.
There will be a new Restart Grant launching in April. Non-essential retail businesses will receive grants of up to £6,000 per premises, whilst the hospitality and leisure industry, including beauty salons and hairdressers, will receive a grant of up to £18,000
More than £400m will also be allocated to help museums, theatres and galleries reopen in England and a £300m package for sports.
A Recovery Loan Scheme, for amounts between £25,000 up to £10m, will be introduced and run from 6th April 2021, until the end of the year, replacing the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) schemes which are coming to an end.
Corporation tax and related measures
The corporation tax rate will increase to 25% in April 2023, but companies with profits of £50,000 or less will benefit from a small profits rate remaining at 19%, with the rate then tapering for those with profits above that threshold.
Businesses will only pay the full rate on profits from £250,000. The Chancellor announced a new super deduction for businesses of 130% of investment costs for the next two years to facilitate immediate business investment. This could be quite significant for businesses in certain sectors, for example, manufacturing and construction firms.
Changes to business asset disposal relief had been much speculated, with many rushing to complete sales in recent weeks just in case, but this has been left alone.
Firms will receive up to £3,000 from an incentive payment to hire apprentices between 1st April and 30th September 2021. There will also be a further £126m for traineeships in England.
Need advice on buying, selling or running a business? Our commercial lawyers are here to help
Our corporate and commercial lawyers boast a strong mix of skills and experience in advising local, national and international companies, across a broad range of industries. To speak to a commercial law solicitor, call us on 0117 325 2929 or fill out our online enquiry form.