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Starting a business

Budget 2021 and the implications for small businesses

The chancellor, Rishi Sunak, has delivered the 2021 Budget which was, as expected, was not full of joy for small businesses.

Some of the main points

  • Furlough to be extended until the end of September
  • Government to continue paying 80% of employees’ wages for hours they cannot work
  • Employers to be asked to contribute 10% in July and 20% in August and September
  • Support for the self-employed also to be extended until September
  • 600,000 more self-employed people will be eligible for help as access to grants is widened
  • Minimum wage to increase to £8.91 an hour from April

Taxation

  • No changes to rates of income tax, national insurance or VAT
  • Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026
  • Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
  • Corporation tax on company profits to rise from 19% to 25% in April 2023
  • Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000

The arts and sport

  • £400m to help arts venues in England, including museums and galleries, re-open
  • £300m recovery package for professional sport and £25m for grassroots football

Business, digital and science

  • Tax breaks for firms to “unlock” £20bn worth of business investment
  • Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
  • Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships
  • VAT rate for hospitality firms to be maintained at reduced 5% rate until September
  • Interim 12.5% rate to apply for the following six months
  • Business rates holiday for firms in England to continue until June with 75% discount after that
  • £5bn in re-opening grants for non-essential businesses initially worth up to £6,000 per premises
  • New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
  • Business rates holiday extended to June
  • Contactless payment limit will rise to £100