The Chancellor, Rishi Sunak, has announced a corporation tax increase for 2023, which could hit self-employed people who work through their limited company.
He's also extended some support schemes, but many self-employed remain excluded.
Rishi Sunak used the UK Spring Budget to outline his ‘three part plan’ towards economic recovery – supporting those still struggling through coronavirus, paying for the response, and investing in the future economy.
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The Chancellor has announced an increase in corporation tax as one step towards paying for the government’s response to coronavirus.
The rate of corporation tax paid on company profits will increase to 25 per cent – but with some crucial protections:
The Chancellor says that this means only 10 per cent of all companies will pay the 25 per cent rate.
As the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) both end this month, the government has announced a new Recovery Loan Scheme designed to support businesses as they recover from the pandemic.
The new Recovery Loan Scheme will offer businesses between £25,000 to £10 million, with the government giving lenders an 80 per cent guarantee. The scheme is scheduled to run from 6 April until the end of the year.
You’ll be able to access the scheme through the government’s network of approved lenders. Read more about the scheme.
The government has announced that the fourth Self-employment Income Support Scheme (SEISS) grant will cover 80 per cent of average monthly trading profits, up to £7,500.
It’s also extended the scheme for a fifth grant covering May to July. The money available will depend on how much you’re affected by coronavirus.
Those who’ve suffered a fall in turnover of more than 30 per cent will be eligible for 80 per cent of average monthly profits (up to £7,500).
Those who haven’t been as affected will be eligible for a grant worth 30 per cent of average monthly profits.
People who are newer to self-employment will now be eligible for these grants, as long as they filed their 2019-2020 tax return by midnight last night.
But while eligibility for SEISS has been widened, there’s still no support for the estimated three million self-employed people forgotten by the government response so far.
These include freelancers, limited company directors, and the self-employed with more than £50,000 in trading profits.
Simply Business’s UK CEO, Alan Thomas, said: "While today’s announcement will provide millions of SMEs with the needed certainty to confidently plan for the future, it’s essential to recognise that many will still be left without the support that they need. We’d urge the Chancellor to do all he can to support the UK’s diverse range of small businesses as we look to bounce back from the effects of the pandemic.”
The Coronavirus Job Retention Scheme (CJRS), or furlough, was the Chancellor’s headline scheme announced before the start of lockdown in March 2020.
Initially designed as a short-term measure to protect jobs and livelihoods, the government has announced that it’ll now run until 30 September 2021.
If you employ people that you’ve furloughed, note that the support will be tapered – you’ll need to contribute 10 per cent towards hours staff don’t work in July, increasing to 20 per cent in August and September.
Our CEO, Alan Thomas, said: “We welcome the decision to extend the furlough scheme through to the end of September. With small businesses accounting for 48 per cent of all UK jobs, this is an essential lifeline for millions up and down the country, and is another show of support to the SMEs who will be key to our collective recovery.”
‘Stealth taxes’ were rumoured before the Budget announcement. Stealth taxes don’t involve headline increases or changes – instead, the government will freeze rises in thresholds.
The Chancellor has committed to a planned rise in income tax thresholds next year. But from then, they'll be frozen:
Simply Business’s UK CEO, Alan Thomas, said about the Budget: “At Simply Business, we welcome the lifeline for small businesses in today’s budget. It’s positive news to see small businesses rightfully recognised in the nation’s economic recovery plan, but know that many self-employed people will be left without the support they need to survive, let alone thrive.
“By providing this latest package of SME support measures which total £33 billion, including the extension of the Self-Employment Income Support Scheme and Business Rates Relief, Mr Sunak will enable many small businesses to make it beyond the current lockdown restrictions. These measures have primed the UK economy for a positive, if phased, reopening as we move through this year.”
What do you think about the announcements in the UK Spring Budget 2021? Let us know in the comments below.
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