Chris Downing, Director of Inspire, the business and tax advisers, answers your questions.

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As a small business owner, what do I need to know from the Budget?

The Chancellor outlined that now is still too early for any major changes, but he gave a good indication of what’s coming up over the next few years, to start to repay the nation’s debts:

• Corporation Tax rises – from April 2023, companies making more than £250,000 profit will pay 25% corporation tax (an increase of 6% from now). Companies with profits up to £50,000 will remain at the current rate of 19%.  Profits between £50,000 and £250,000 will see a tapered rise.
• Personal tax bands will be frozen until 2026, with personal allowances held at £12,570 for the standard rate and the higher rate tax bracket at £50,720.
• Company losses can be carried back three years, instead of one (up to £2 million)
• The new ‘super-deduction’ will offer a 130% tax deduction for capital expenditure. £100 spent becomes £130 for tax purposes – an extra £5.70 of tax saved!
• Perhaps surprisingly, there were no changes to Capital Gains Tax or pension rates – at least for the time being.

There was good news for employers too, with another extension to the Coronavirus Job Retention Scheme (furlough) until the end of September:

• The scheme stays as it is until the end of June, with the government paying 80% of wages (capped at £2,500), but the employer will still need to pay National Insurance and pension contributions.
• In July, employers will have to contribute 10% towards the hours their staff don’t work. For August and September, this contribution will increase to 20%.
• Claims for furlough days in February 2021, must be submitted by 15 March 2021 (there’s a guide to all the claim dates here).

The Chancellor also announced two new Help to Grow schemes for SMEs – offering training and support in management and digital.  You can register your interest now for either programme, with the management training activity beginning in June and the digital activity in the autumn.  To be eligible you must be a UK-based business with 5 to 249 employees and have been operating for more than one year.

I’m self-employed, can I now qualify for additional Coronavirus support?

As with the furlough scheme, support has also been extended through to September if you are self-employed, a sole trader or a member of a partnership, under the Self-Employment Income Support Scheme (SEISS). The main difference announced in the Budget is that if you became self-employed in the tax year 2019/20, you may now be eligible for SEISS.

• A fourth grant (covering February to April) will be available for eligible individuals, calculated at 80% of 3 months’ average trading profits. As with previous grants, this will be paid in a single instalment and capped at £7,500.  HMRC will contact you in April if you are eligible to make a claim
• A fifth – and final – grant (covering May to September) will also be available (to claim from July), but the amount you receive will depend on how much your turnover reduced in the year April 2020 to April 2021:
  • If turnover has been reduced by 30% or more, you will be able to claim 80% (capped at £7,500) in-line with previous grants.
  • If turnover has been reduced by less than 30% you will only be able to claim for 30% of 3 months’ average trading profits (capped at £2,850)

There is still no support for Director/Shareholder individuals.

What support is there to get my business back up and running when I re-open next month?

To help get non-essential retail, hospitality and leisure businesses back open, in line with the government’s roadmap out of lockdown, the Chancellor announced a further package of support:

• Access to re-start grants, ranging from £6,000 – £18,000 per business, depending on when you can re-open. The funding will be distributed directly to businesses by the local authorities from April – replacing the current monthly grant system.
• 100% business rates relief will continue until 30 June for all retail, hospitality and leisure businesses. If you were required to be closed on 5 January 2021 (as part of the national lockdown), then you will receive a discount of 66% until 31 March 2022, capped at £2 million.
• The temporary reduced rate of VAT of 5% for hospitality and tourism has been extended until 31 September 2021. It will then be increased to 12.5% until 31 March 2022.
• Coronavirus Business Interruption Loans (CBILS) and Bounce Back Loans are only available until 31 March 2021. A new loan scheme to replace these, launches on 6 April. The Recovery Loan Scheme is available to eligible business and can be taken in addition to an existing government-backed loan. You can borrow between £25,000 and £10 million with repayment terms up to six years.  The loan is 80% guaranteed by the government and you don’t have to have your primary home as security.

You can hear more reaction to the Budget and our advice for businesses in our new podcast, 2 + 2, available to download now!