What does Budget 2021 mean for businesses?

Chancellor Rishi Sunak has just revealed the 2021 Budget, and with it comes a vast amount of change and support for businesses.

As more than 700,000 people have lost their jobs and with the economy shrinking by 10%, Sunak stated that he will do ‘whatever it takes’ during the pandemic to aid our economy.

Describing today’s statement as the first step in the long road to recovery, the Chancellor added: “It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation.”

Below, we’ve summarised the main points.

Furlough extension

The Coronavirus Job Retention Scheme (CJRS) is now extended until September.

Those who have been furloughed will see no changes as they will continue to receive 80% of their wages for the hours not worked.

But businesses will see some slight alterations, as from July, they will be required to contribute 10%, with that rising to 20% in August and September.

Recovery loan scheme 

Among all the support announced, the Recovery Loan Scheme is perhaps the most ambitious, offering businesses of all sizes the opportunity to borrow between £25,000 and £10m.

Restart Grant

The Restart Grant will provide businesses with additional funding to support them during their initial reopening.

Non-essential retail will receive up to £6,000 while those in the hospitality and leisure sector will be able to access up to £18,000.

Increased incentive payments for apprentices

From 1April to 30 September, the incentive payments that businesses receive for hiring new apprentices will be doubled to £3,000.

Tax tweaks

The 2021 Budget saw a wide range of announcements regarding tax.

Firstly, the VAT registration threshold will remain at £85,000 until 2024.

Changes to Income Tax thresholds will be frozen from April 2021 to April 2026, following the initial increases to basic allowance (£12,570) and the higher rate (£50,270).

Corporation Tax will also increase in April 2023, from 19% to 25%, although this will only affect businesses with a profit greater than £50,000.

In an attempt to promote innovation among businesses, a ‘super-deduction’ will be available for those looking to invest, reducing tax bills by 130%.

National Living Wage changes

The National Living Wage (NLW) saw an increase to £8.91, which is equivalent to almost £350 a year.

Also, the age limit to receive the National Living Wage is dropping from 25 to 23.

How IRIS can help

We appreciate that the Budget may seem overwhelming, but don’t worry, IRIS has a wide array of solutions to help.

In regards to all the furlough and tax changes, our world-class payroll outsourcing service, IRIS Fully Managed Payroll, is available to alleviate your responsibilities.

Outsourcing could also cost a lot less than you think – request a quote here.

If you’re looking to take advantage of the grants and bring on some extra talent, our cloud-based HR software, IRIS HR Pro, is the tool you need.

Perfect for businesses of every size, IRIS HR Pro gives you the tools needed to streamline your people processes, enabling you to refocus your time on your business.

Click here for more information on IRIS HR Pro.