The budget announcement today will impact large businesses with an increase in corporation tax from 19% – 25% in 2023 while the personal allowance and higher rate thresholds will be frozen for four years.
The Help to Grow scheme offers a discount on software of up to £5,000 to help companies “manage their accounts and finances digitally”.
Furlough scheme confirmed to continue until the end of September. Employees will continue to receive 80% of their salary for hours not worked. There will be no employer contributions required beyond NICs and Pensions in April, May, or June. From 1 July, employer contributions of 10% of the cost of unworked hours will be required, increasing to 20% from 1 August until the scheme ends on 30 September of this year.
Staff who have not worked cannot be classed as undertaking any R&D activity either, which may sound obvious but does need to be considered. Many companies’ R&D claims will have lower salary costs, contributing to lower overall claims for accounting periods covering the years 2020 and 2021.
- SEISS – grants 4 & 5 will be made available to those who filed their tax returns by midnight on 2 March.
- £700m in “restart grants” to arts and sports organisations
- 100% business rates holiday for all retail and leisure businesses continue until the end of June. Rates will be discounted by 66% for the rest of the year up to a maximum of £2bn.
- Hospitality and tourism: 5% reduced rate of VAT extended to 30 September will go back via a 12.5% interim rate for another six months after that.
- Nil rate band of Stamp Duty on house purchases less than £250,000 extended until the end of September, and 95% mortgage guarantee scheme.
Inheritance tax thresholds, the pensions lifetime allowance, and the annual exempt amount in capital gains tax will be maintained at current levels until April 2026, as well as the VAT registration threshold until April 2022.
Over £180m has been set aside to invest specifically in a clampdown on tax avoidance and evasion. The government will invest in additional resources and technology for HMRC, forecast to bring in over £1.6bn of additional tax revenues by 2025-26.
This will enable HMRC to recruit additional compliance staff, increasing its capacity to target non-compliance occurring through illicit financial flows.
Whilst recovery is the key goal of this Budget, the commitment of such a large sum to HMRC indicates compliance to be its priority.