How does the Budget affect Northern Ireland businesses?
The Chancellor, Rishi Sunak, delivered his Budget statement on Wednesday 3 March 2021. We have summarised the key points from the Budget and specific issues affecting Northern Ireland businesses.
4.0% in 2021-22
7.3% in 2022-23
1.7% in 2023-24
1.6% in 2024-25
1.7% in 2025-26
17.0% of GDP in 2021-22
4.5% of GDP in 2022-23
3.5% of GDP in 2023-24
2.9% of GDP in 2024-25
2.8% of GDP in 2025-26
88.8% of GDP in 2021-22
93.8% of GDP in 2022-23
97.1% of GDP in 2023-24
97.0% of GDP in 2024-25
96.8% of GDP in 2025-26
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme will be extended until 30 September 2021 and employees will still receive 80% of the wages for the hours they cannot work. Employers will be asked to contribute 10% to the scheme in July and 20% in August and September.
See Changes to the Coronavirus Job Retention Scheme from July 2021.
Self-Employment Income Support Scheme (SEISS)
The scheme has been widened to newly self-employed that have filed their first tax return for the 2019-20 tax year.
The SEISS fourth grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. This grant will cover the period February to April 2021 and can be claimed from late April.
The SEISS fifth grant will cover the period May to September 2021. 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 the full 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 fifth grant can be claimed from late July.
The temporary £20 per week increase to the Universal Credit standard allowance has been extended until September 2021. This applies to Great Britain (England, Scotland and Wales) but the Northern Ireland Executive will be funded to replicate this arrangement in Northern Ireland.
Alongside this, the government will make a one-off payment of £500 to eligible Working Tax Credit recipients across the UK.
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 to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
See Apply for the Recovery Loan Scheme.
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. This scheme is a temporary COVID-19 measure intended to support employers while levels of sickness absence are high. As with other business support schemes, the government will set out steps for closing this scheme in due course.
See Check if you can claim back Statutory Sick Pay paid to employees due to coronavirus (COVID-19).
VAT Deferral New Payment Scheme
Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of 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.
See Pay VAT deferred due to coronavirus (COVID-19).
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 will be extended until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
Contactless payment card limit
An increase to the legal contactless payment limits has been approved by the government. This will allow banks to support single contactless payments up to £100, and cumulative contactless payments up to £300, without the need for customers to input their chip and pin. The new limits are due to be introduced later this year.
Extended loss carry back for businesses
To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing 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 corporate 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 corporate 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 corporate 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
Northern Ireland specific announcements
An additional £410 million of funding will be provided to the NI Executive under the Barnett formula.
In order to protect jobs, increase productivity and maintain the competitiveness of Northern Ireland, the Chancellor outlined direct local investment to towns and communities across the UK to improve town centres, high streets, local transport and cultural assets through the £4.8 billion Levelling Up Fund, the Community Ownership Fund, and Community Renewal Fund.
Government will work with the Northern Ireland Executive to establish at least one Freeport in Northern Ireland, which will channel new investment to regenerate communities.
The income tax Personal Allowance will rise to £12,570 from April 2021 and will remain at this level until April 2026. The income tax HRT will rise to £50,270 from April 2021 and will remain at this level until April 2026.
National Insurance contributions (NICs) thresholds
In 2021-22 the NICs Primary Threshold/Lower Profits Limit will increase to £9,568 and the Upper Earnings Limit (UEL)/Upper Profits Limit (UPL) will increase to £50,270. The UEL/UPL will then remain at £50,270 until April 2026.
The inheritance tax nil-rate bands will remain at existing levels until April 2026. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.
Capital Gains Tax
The value of gains that a taxpayer can realise before paying Capital Gains Tax, the Annual Exempt Amount, will be maintained at the present level until April 2026. It will remain at £12,300 for individuals, personal representatives and some types of trusts and £6,150 for most trusts.
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 relief for businesses with profits under £250,000 so that they pay 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 so that it remains an effective deterrent against diverting profits out of the UK.
The increases in National Minimum Wage and National Living Wage will go ahead as planned from 1 April 2021. See minimum wage rates increase from 1 April 2021.
The government will extend the temporary increase in the residential Stamp Duty Land Tax Nil Rate Band to £500,000 in England and Northern Ireland 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.
Change to Support for Mortgage Interest for claimants moving home
The government will help Support for Mortgage Interest claimants in Great Britain to move home by allowing them to add the legal costs associated with transferring their claim to a new property to the value of their loan from 15 March 2021. The Northern Ireland Executive will be funded to replicate this change in Northern Ireland.
Rates of duty
The rates of duty for alcohol and fuel have been frozen at current levels.
Helping businesses grow
Help to Grow: Management
The government will offer a new UK-wide management programme to upskill 30,000 SMEs in the UK over three years. The programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. Over 12 weeks, and 90% subsidised by government, this programme will equip SMEs with the tools to grow their businesses and thrive.
Help to Grow: Digital
The government will launch a new UK-wide scheme in the autumn to help 100,000 SMEs save time and money by adopting productivity-enhancing software, transforming the way they do business. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.
Businesses can now register their interest in both Help to Grow schemes.
First published 3 March 2021