The budget of 3 March 2021 included the announcement of a further £65 billion of government spending on the extension of existing support measures, as well as the introduction of some new schemes, all of which are set out in this Covid Support Measures update.
These new pledges for financial support are expected to take the anticipated total cost across the various government backed Covid support measures to £352 billion in this financial year, with public sector debt expected to reach a peak of 97.1% of GDP by 2023/24 before gradually improving.
Coronavirus Job Retention Scheme (CJRS)
The CJRS, which was due to end in April 2021, will now be extended to the end of September 2021.
- The scheme will provide the same level of support as under the current arrangements until June 2021;
- From July, the government will introduce the requirement for an employer contribution towards the cost of unworked hours of 10% in July;
- This will increase to 20% in August and 20% in September; and
- Employees will continue to receive 80% of their current salary, capped at £2,500 per month, for hours not worked.
This means employers can continue to use full or partial furlough to support their workforce whilst “closed” sectors reopen and start to recover.
Self-Employment Income Support Scheme (SEISS): fourth and fifth grants
- The fourth grant will cover February to April 2021 and will be paid out between late April and May 2021; and
- The fifth, and final, grant will be available to claim from July until September 2021.
The fourth SEISS grant
- The fourth grant is calculated at 80% of three months’ of average trading or partnership profits for the last four years; and
- Is capped at £7,500.
This is the same level of support as announced in the first and third grants, except the number of tax years now taken into account has been widened to four years (previously three tax years). This means profits declared on 2019/20 tax returns will now also be taken into account in computing the amount of grant payable to a self employed taxpayer.
Self-employed individuals must have filed a 2019-20 Self Assessment tax return to be eligible for the fourth grant.
This also means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019-20 and, for some, this may be the first government support received during the pandemic.
All other eligibility criteria will remain the same as the third grant, including the significant reduction in profits test.
The fifth SEISS grant
There will be a fifth and final SEISS grant covering May to September 2021. The value of the fifth grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens.
The fifth grant will require a Financial Impact Declaration that determines whether applicants are eligible for either a higher or lower grant amount based on how much their turnover has reduced in the year April 2020 to April 2021.
If turnover is reduced by more than 30% applicants will be entitled to the higher grant amount. If turnover is reduced by less than 30% applicants will be entitled to the lower grant amount.
Subject to the Financial Impact Declaration, the grant will be calculated either at
- 80% of three months of the claimant’s average trading or partnership profits for the last four years, capped at £7,500 for the higher grant amount; or
- At 30% and capped at £2,850 for the lower grant amount.
VAT: extension to reduced rate for hospitality, accommodation and attractions (5% to 30 September 2021 then 12.5% to 31 March 2021)
The Chancellor announced a very welcome extension to the temporary reduced rate of VAT on supplies of accommodation, food and beverage services excluding alcohol, and specified attractions (see below).
- The extension of the 5% rate is for 6 months from 1 April 2021 to 30 September 2021; and
- This is followed by a 12.5% rate until 31 March 2022.
What counts as a specified attraction?
The VAT guidance confirms that the reduced rate applies to businesses that make supplies of admissions as follows:
- Amusement parks;
- Exhibitions; and
- Similar cultural events and facilities.
Examples of where the reduced rate may also apply could be “attractions” such as:
- A planetarium;
- Botanical gardens;
- Studio tours; and
- Factory tours.
This temporary reduced rate only applies to admission fees and does not apply to admission to sporting events.
Extension of the Statutory Sick Pay (SSP) Rebate Scheme
Employers with fewer than 250 employees will continue to be able to reclaim up to two weeks’ of eligible SSP costs per employee from the Government.
Eligible sickness absence includes time taken off due to being ill with COVID-19 or having to self-isolate or shield because of it. This scheme is a temporary COVID-19 measure intended to support employers whilst levels of sickness absence are high and was first introduced on 13 March 2020.
Recovery Loan Scheme
This new loan scheme will enable businesses, of any size, to continue to access loans through a series of accredited lenders.
The scheme launches on 6 April and will remain open until 31 December 2021, subject to review.
- Term loans and overdrafts will be available between £25,001 and £10 million per business, with finance terms up to three years;
- Invoice finance and asset finance will be available between £1,000 and £10 million per business, with finance terms up to six years; and
- No personal guarantees will be taken on facilities up to £250,000 and a borrower’s principal private residence cannot be taken as security.
Businesses applying for the loan must
- Be trading in the UK;
- Have been impacted by the coronavirus pandemic; and
- Not be subject to insolvency proceedings.
Business that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under this scheme.
Loans will be available through a network of accredited lenders, whose names will be published later. We will bring you more detail on this at that time.
New “Help To Grow” Scheme
This programme from the Government offers small and medium-sized businesses access to new skills and digital expertise. The purpose of the Scheme is to help small and medium sized businesses across the UK learn new skills, reach new customers and boost profits.
The scheme is divided into two parts – Help To Grow: Digital and Help To Grow: Management.
Help To Grow: Management
Help To Grow: Management will give 30,000 businesses the opportunity to take part in a 12 week-programme delivered by business schools across the UK.
- Fifty hours of tuition will provide strategic skills including financial management, innovation and digital adoption; and
- The programme is 90% subsidised by the Government, with participants charged £750.
Who is it for?
UK businesses from any sector that have been operating for more than one year, with between 5 to 249 employees are eligible.
The participant should be a decision maker or member of the senior management team within the business e.g. Chief Executive, Finance Director etc.
Charities are not eligible.
Help To Grow: Digital
Help To Grow: Digital will enable businesses to access free advice, via an online hub, on the technologies that can help save time and money, whilst encouraging growth.
- Eligible businesses will be given vouchers, entitling them to 50% off the purchase of approved software;
- It is expected that this will be software to help build customer relationships, optimise online sales and manage finances digitally;
- The voucher is expected to be available to UK businesses that have been trading for more than one year and are purchasing discounted software for the first time; and
- Full details of eligibility will be published this summer.
Who is it for?
All businesses will be able to benefit from free online advice on the platform.
The voucher is expected to be available to UK business that
- Employ between 5 and 249 employees and are registered at Companies House;
- Have been trading for more than 12 months; and
- Are purchasing the discounted software for the first time.
It may be that companies and LLPs who will be required to participate in Making Tax Digital from next April may be able to get support for first-time accounting software but we will comment more on this when we know the parameters of the new Help to Grow: Digital scheme.
Stamp Duty Land Tax (SDLT) extension
On 8 July 2020, the SDLT nil rate band threshold was increased temporarily to £500,000 until 31 March 2021.
The government has now extended this increased nil rate band threshold at £500,000 for three months until 30 June 2021. It will then be held at £250,000 until 30 September 2021, before returning to its permanent level of £125,000 from 1 October 2021.
A new Mortgage Guarantee Scheme for 95% mortgages
The Government has announced a new Mortgage Guarantee Scheme to increase the availability of 95% loan to value mortgage products. The scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000.
Under the scheme, all buyers will have the opportunity to fix their initial mortgage rate for at least five years should they wish to.
The scheme is intended as a temporary measure and will be open for new mortgage applications from April 2021 to December 2022. A panel of high street lenders is participating in the new scheme.
Restart Grant Scheme
A new Restart Grant was announced where non-essential retail businesses will receive grants of up to £6,000 per premises to help them re-open in April.
Hospitality, accommodation, leisure, personal care and gyms, which will re-open later, or be more affected by restrictions when they do, will be eligible to receive grants of up to £18,000.
The grants should provide businesses with a much-needed cash injection to plan ahead and safely re-open their businesses over the upcoming months.
The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated.
Business Rates Relief
The existing business rates holiday for businesses in the retail, hospitality, and leisure sectors, was due to end on 31 March 2021. This has now been extended for three months until the end of June 2021.
For the following nine months to 31 March 2022, rates will be discounted by two thirds, up to a limit of £2 million per business for properties that were required to be closed on 5 January 2021, with a lower cap for businesses that have been able to stay open.
Should you have any queries on the Covid Measures announced in the 2021 Budget, or require any help or support during these challenging times then please either get in touch with your usual M+A Partners contact or email email@example.com and we will be happy to help.