Measures to mitigate the impact of Coronavirus
- Extension of the Coronavirus Job Support Scheme (‘furlough payments’) to September 2021 across the UK, with employer contributions to salary from July
- Fourth Self Employment Income Support Scheme grant covering February to April 2021 to claim from late April, similar to first three grants – and newly self-employed people who filed 2019/20 tax returns by 2 March may be eligible to claim for the first time
- Fifth Self Employment Income Support Scheme grant covering May to September to be claimed from late July, varying in amount according to the fall in turnover during the pandemic
- No further support announced for people working as directors through their own personal companies
- 6-month extension of the £20 per week Universal Credit uplift, with an equivalent £500 grant to eligible Working Tax Credit claimants
- Range of ‘Restart’ grants for businesses reopening after lockdown
- Recovery Loan Scheme from 6 April 2021: government to guarantee 80% of eligible loans from £25,000 to £10 million to give lenders confidence to support UK businesses, with some other loan schemes coming to an end on 31 March 2021
- Business rates holiday for eligible retail, hospitality and leisure premises in England continues for first 3 months of 2020/21, followed by a 66% discount for the rest of the year
- 5% reduced rate of VAT for hospitality and leisure industry extended from 1 April to 30 September 2021, followed by 12.5% intermediate rate to 31 March 2022
- Nil rate of Stamp Duty Land Tax on property transactions up to £500,000 extended from 31 March to 30 June 2021, with £250,000 threshold up to 30 September 2021
- Duties on alcoholic drinks and fuel frozen for the second year running
Tax year 2021/22
- Small increases in main Personal Allowance, Basic Rate Band and National Insurance thresholds confirmed, as already announced
- Lifetime Allowance for tax-advantaged pension funds, Inheritance Tax nil rate band, Capital Gains Tax annual exempt amount, ISA subscription limits all frozen at 2020/21 levels
- No increase in CGT rates announced, contrary to some speculation in advance
- Corporation Tax rate remains 19% until 31 March 2023
- New ‘super-deduction’ for investment by companies: 130% of qualifying expenditure on general plant for two years from 1 April 2021 can be deducted from taxable profit (50% for ‘special rate’ assets, and cars are excluded)
- Trading losses (up to £2 million) for companies and self-employed businesses to be carried back up to 3 years instead of the usual 12 months, making it possible to set current losses against pre-pandemic profits to obtain a repayment
- Cap on Research and Development claims: payable tax credit not to exceed £20,000 plus three times PAYE & NIC liability
- No significant changes announced to ‘off-payroll working’ (IR35) rules, which will apply to large and medium-sized private sector employers from 6 April 2021, as previously announced
Tax measures coming into effect later
- Personal allowances and income tax rate thresholds frozen at 2021/22 levels until the end of 2025/26
- Lifetime Allowance for tax-advantaged pension funds, Inheritance Tax nil rate band and Capital Gains Tax annual exempt amount all frozen at their current levels until the end of 2025/26
- VAT registration threshold fixed at current level of £85,000 until 31 March 2024
- Corporation tax rate on profits over £250,000 to increase to 25% from 1 April 2023, with the current 19% rate applying to profits below £50,000 and a tapering calculation on profits between £50,000 and £250,000
- Establishment of ‘Freeports’ enjoying significant tax breaks announced in 8 areas of England, with further areas to be discussed with devolved administrations
In the last few days, the Government has made major announcements about help for small businesses and individuals affected by coronavirus. Below is a summary of the significant points, although details are awaited as to how some of these schemes may be accessed.
The following measures were announced in the Budget and have not (to date) been updated.
- Statutory Sick Pay (SSP) to be paid from the first day of absence, not the fourth, where people have the virus or have to self-isolate, or care for such people.
- Support through Universal Credit and Employment and Support Allowance for self-employed people and others not entitled to SSP.
- Full funding of the cost of two weeks’ SSP for small and medium-sized employers whose workers have claimed SSP as a result of coronavirus.
- Businesses and self-employed individuals in financial distress will be able to negotiate ‘time to pay’ arrangements with HMRC without incurring late payment penalties.
At a press conference on Tuesday 17 March, the following additional measures were announced.
- Any business that needs access to cash to pay their rent, salaries, suppliers, or to purchase stock, will be able to access a government-backed loan on “attractive terms” (which have not yet been specified).
- That support will be delivered to small and medium businesses via the new Business Interruption Loan Scheme (announced at the Budget), which will now provide loans of up to £5 million, with no interest due for the first six months.
- The scheme will be up and running by the start of next week.
- Retail, hospitality and leisure sectors
- All businesses (not just those with a rateable value of less than £51,000, as previously announced), will pay no business rates for 2020/21.
- Those businesses with a rateable value below £51,000 will also be eligible for an additional cash grant of up to £25,000 (i.e. cash payment from the government) per business, to help them through this period.
- This means that every single shop, pub, theatre, music venue, restaurant , etc. will pay no business rates whatsoever for 12 months and, if they have a rateable value of less than £51,000, they can now get a cash grant as well.
- The 700,000 or so small businesses that are already eligible for 100% business rates relief will receive a grant of £10,000 (not £3,000, as previously announced) to help with business costs.
For those individuals in difficulty due to coronavirus, mortgage lenders will offer at least a three-month mortgage holiday, so that people will not have to pay a penny towards their mortgage while they get back on their feet.
Separately, speaking in Parliament on Tuesday evening, Chief Secretary to the Treasury Steve Barclay said: “The government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021.”
The Chancellor, Rishi Sunak, intends to come forward with proposals next week to help those unable to work due to coronavirus. In some other countries, such support has included the government paying a large proportion (sometimes over 75%) of the person’s normal salary or self-employed earnings for several weeks. We await to see if the UK will go down a similar route.
Measures to mitigate the impact of Coronavirus
- £12 billion package of tax and spending measures including grants and hardship funds for people and businesses affected
- Statutory Sick Pay to be payable from first day’s absence and fully funded by the Government for 14 days; support also for workers in gig economy and self-employed, and relaxed conditions for those who self-isolate
- Business rates relief for the next year increased from 50% to 100% for retail businesses with rateable values up to £51,000; this relief extended to leisure and hospitality businesses as well, and further relief for small pubs
- Small businesses already eligible for 100% rates relief to receive £3,000 cash payment
- Businesses and individuals with cash flow difficulties promised ‘Time to Pay’ their taxes with a dedicated HMRC helpline
Tax measures with immediate effect
- Lifetime limit for gains eligible for Entrepreneurs’ Relief (taxed at 10% instead of 20%) reduced from £10m to £1mfor disposals from Budget day
- Duties on alcoholic drinks and fuel frozen
Tax year 2020/21
- No changes to personal income tax allowances and rates: 2019/20 figures continue for a second year, as expected
- Increase in threshold for National Insurance Contributions from £8,632 to £9,500
- Increase in thresholds for ‘Annual Allowance pensions taper’ from £110,000 and £150,000 to £200,000 and £240,000
- Lifetime Allowance for pensions increased in line with inflation to £1,073,100
- ISA allowance remains £20,000 per year, but Junior ISA/Child Trust Fund limits rise from £4,368 to £9,000
- As announced in advance, Corporation Tax rate remains 19% rather than being reduced to 17%
- No changes announced to ‘off-payroll working’ (IR35) rules, so they will apply to larger private sector employers from 6 April 2020 as previously announced
- No change announced to new rules for reporting and paying CGT on chargeable residential property, so deadline becomes 30 days
- Employment Allowance for small businesses increased from £3,000 to £4,000 of Employers’ NIC
- Research & Development expenditure credit increased from 12% to 13%
- Structures and Buildings Allowance increased from 2% to 3%
Tax measures coming into effect later
- VAT ‘Domestic Reverse Charge’ on construction services, deferred from 1 October 2019, confirmed for introduction on 1 October 2020
- VAT zero-rating to apply to digital versions of newspapers and books as well as printed versions from 1 December 2020
- Abolition of VAT on women’s sanitary products from 1 January 2021
- VAT on imports to be dealt with by ‘postponed accounting’ (on the VAT return, not on the docks) by businesses from 1 January 2021
- Stamp Duty Land Tax surcharge of 2% introduced for non-resident buyers of UK property from 1 April 2021
- Tax relief on ‘red diesel’ removed for most sectors but retained for agriculture, home heating and rail in April 2022
- New plastic packaging tax for manufacturers in April 2022, as well as a shift in Climate Change Levy from electricity to gas