What Does the 2021 Budget Mean for My Small Business?
The annual 2021 Budget contained some key information that will directly impact small businesses. Rishi Sunak's plans to extend furlough and continue the self-employment grant certainly give small businesses a reason to feel positive about the upcoming year. However, a real concern for many was how the 2021 Budget would focus on supporting smaller businesses and those who are self-employed.
The government has put in place a roadmap to navigate the UK out of lockdown but what will this entail for small businesses to ensure that they're in a stable position? With this in mind, in this blog, we'll outline some of the key information to take from the 2021 Budget and detail what this means for you as a small business owner or as a self-employed person.
The Furlough Extension Scheme
Prior to 2020, the majority of us had no idea what furlough was, employers and employees alike. Nevertheless, the furlough scheme has enabled over 11 million people to stay in employment. As an employer, the Coronavirus Job Retention Scheme continues to allow you to furlough employees, while the government pays 80% of furloughed staff wages.
The scheme was initially due to end 30th April 2021, however, this has now been postponed to late September 2021. There are no major changes involved for those on furlough however, as an employer, you will now have to pay 10% towards the hours employees spend not working during July. This percentage will then increase to 20% in August and September.
For most small businesses, this continuation of furlough is welcome news and put in place in order to ensure that small businesses don't just stay afloat but prosper in 2021.
Continuation of the Self-employment (SEISS) Scheme
Many self-employed people will be delighted at the news that The Self-employment Income Support Scheme has been extended and a new wave of grants are all set to go ahead. It's structured so that the fourth grant will cover February-April, will be based on 80% of earrings and is going to be paid in April. A fifth grant will then cover July-August. If your turnover has dropped by at least 30%, you will continue to receive the 80% grant. If your turnover has fallen by less than 30%, you will still be eligible to receive a 30% grant.
Another important piece of information is that the scheme has been further extended to those who are only recently self-employed. Prior to this, to be eligible for SEISS you needed to have a tax return from 2018-19, now, you are eligible if you have filed a 2020 tax return. This opens the opportunity to be eligible for SEISS for lots more self-employed people.
Business Grants
The government has stated that they will give up to £6,000 to businesses that can open sooner and up to £18,000 to hospitality businesses that are forced to open at a later time. A new recovery loan scheme for businesses of all sizes with an 80% government guarantee to lenders has also been announced.
Help to Grow Schemes
The government is set to introduce two Help to Grow schemes which are scheduled to go ahead by Autumn 2021. The aim of the Help to Grow scheme is to help support small to medium-sized businesses to receive management training which will be 90% paid for by the government. Another facet of the scheme is called the Help to Grow: Digital scheme. This enables small businesses to develop digital training by industry professionals and 50% off new software worth up to £5,000.
Recovery Loans Scheme
The Bounce Back Loan Schemes is due to close to new applications at the end of April. Instead of this a new scheme is going to be put in place which is referred to as The Recovery Loan Scheme. All businesses regardless of their size will be able to borrow between £25,000-10m. You can apply for this up until the end of 2021 and the government will provide a guarantee for lenders of 80% to coincide with the amount of money borrowed.
VAT and Business Rates
The VAT rate for hospitality and tourism is to be extended until 30th September. This comes with a 12.5% interim rate which lasts for a total of 6 months. The 20% rate is not going to return until 2022.
We hope this overview has been useful in sharing what the 2021 budget means for your small business. Here at Keith Graham, we understand how stressful the last year has been for lots of small businesses. We provide accountancy services for lots of small businesses, larger companies and individuals across Farnham, Farnborough, Aldershot and the rest of Surrey and Hampshire. To find out more about what we can do for your small business, contact us today. You can also fill out our quick and simple online form if you'd prefer. We'd be delighted to help with any enquiries.