Wright Vigar budget review  

As ever, our detailed summary of key changes will be available tomorrow, but for now we want to share some of the good news to assist us through the next few months.

There has been much speculation since the beginning of the year about how Rishi Sunak will be able to balance the books following the massive spending that has been necessary to support the economy through the pandemic. Some feared that moves to increase taxes might begin to filter in immediately. However, for now there is a lot of continued support on offer with, Mr Sunak told us, honesty about the changes necessary in the future to rebalance the economy.

This budget was to cover three main areas:

• A support plan
• Details of how the government plan to fix public finances and finally
• How they plan to build the future economy

Here is an overview of the support measures that will hopefully see us to the end of the pandemic and help businesses to start to rebuild.

Support for:

Employees
The furlough scheme will be extended until the end of September, and whilst employees will continue to receive 80 per cent of their salary for hours not worked, businesses will be asked for a 10% contribution from July and 20% in August and September.

Self-employed
The self-employed income support scheme has also been extended until September in two tranches. Each tranche covers a three-month period and is based on average trading profits from before the pandemic.

Those on universal credit

The Universal Credit uplift of £20-per-week will continue for a further six months.

Businesses

Loans – Following on from CBILS and bounce back loans, a new loan scheme is to be introduced open to any size of business through to the end of this year.  Loans of between £25K and £10million will be available and backed by a government guarantee of 80%.

Loss carry back for companies – There will be a temporary extension to the loss carry-back rules. Currently, trading losses in companies can be carried back up to 12 months, with any unused losses then carried forward. For accounting periods ending between 1/4/2020 and 31/3/2022, the carry back will be extended to three years. There will be no restriction to the offset within the existing 12 month carry back period, but carry back to the two years before this will be limited to £2million, and groups will have to share this £2million limit.

Loss carry back for unincorporated businesses – The rules for offset against general income are unchanged, but trading losses will be able to be carried back for three years against profits of the same trade. As for companies, there will be a £2million cap on the losses available to offset against the earlier 2 years of the three-year period. However, there is no similar partnership level cap to match the group rules.

Super-deduction for plant and machinery – From 1 April 2021 to the end of March 2023, businesses are being offered a super-deduction of 130% for expenditure on plant and machinery that would normally qualify for inclusion in the main pool. Items for which contracts had been entered into before budget day will not qualify, and neither will any used or second-hand assets. Disposal receipts will be taxed as balancing allowances rather than taken to the pool.  For items qualifying for the special rate pool, where writing down allowances are currently at 6% per annum, a 50% first year allowance will be available.

Homebuyers

The stamp duty holiday will be extended to end of June this year on the first £500,000 of a property purchase price, and this will be followed by a nil band up to £250,000 until the end of September and the original £125,000 band applying form 1 October. On top of this, the government is offering a mortgage guarantee to lenders to encourage them to offer 95% mortgages, enabling those unable to save enough for a large deposit to access the housing market. These are expected to be available from April.

The hospitality industry

The reduced rate of 5% VAT has been extended until the end of September, followed by a further six months at 12.5% before a return to the standard rate in April 2022.

Drinkers and Drivers (but not both at once please!)

Duty on both fuel and alcohol has been frozen for another year.

More to follow tomorrow in our full Budget Summary which provides an overview of the key announcements arising from the Chancellor’s speech. However, it will also looks beyond the headlines and offers details on the less-publicised changes that are most likely to have an impact upon your business and your personal finances.