UK Budget 2021 - COVID-19 supports

Mar 08, 2021

Last Wednesday's Budget gives many businesses the financial support and certainty needed as the Government begins to lift public health restrictions. The continuation of the coronavirus job retention scheme (“CJRS”) and the extensions to both the stamp duty land tax £500,000 zero rate threshold and the 5 percent reduced VAT rate for the hospitality sector will also give businesses a fighting chance of a viable comeback. The announcement that many of the newly self-employed in 2019/20 will also be eligible for the fourth and fifth self-employed income support scheme grants is also welcomed.

Job retention scheme extension

The CJRS is extended for a further five months from the end of April 2021 to the end of September 2021. There will be no employer contributions required beyond employers NIC and pensions in the months of April, May and June. This effectively means no change will be made to the current regime until July.

From July, the Government will introduce an employer contribution towards the cost of unworked hours of 10 percent in July, 20 percent in August and 20 percent in September, as the economy reopens. Employees will continue to receive 80 percent of their current salary, capped at £2,500 per month, for hours not worked.

The CJRS has protected more than 11 million jobs since its introduction last March and had been due to close at the end of April. Approximately 110,000 jobs in Northern Ireland are currently protected by the scheme. The budgeted cost of extending the scheme until September is £6.945 billion.

Self-employed income support scheme

As expected, details of the fourth self-employment income support scheme (“SEISS”) grant were announced. The fourth grant will be worth 80 percent of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April, and can be claimed from late April.

Self-employed individuals must have filed a 2019/20 self-assessment tax return which, according to the Chancellor’s speech must have been filed by midnight on Tuesday 2 March.

This means the fourth grant can now also be claimed by the newly self-employed in 2019/20, subject to the relevant criteria being met. All other eligibility criteria will remain the same as the third grant.

A fifth and final SEISS grant covering May to September will also be available. The value of the grant will be determined by a turnover test as follows:-

  • anyone whose turnover has fallen by 30 percent or more will continue to receive the full grant worth 80 percent of three months’ average trading profits, capped at £7,500;
  • anyone whose turnover has fallen by less than 30 percent will receive a 30 percent grant, capped at £2,850.

The final grant will open for claims from late July. Further details on both grants will be published in due course.

Stamp duty land tax zero percent threshold

The extension of the stamp duty land tax zero percent rate on residential properties in England and Northern Ireland costing less than £500,000 which was due to end on 31 March is now extended to 30 June 2021. From July the zero percent threshold will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.

5 percent VAT for the hospitality sector

The temporary 5 percent rate of VAT for goods and services supplied by the tourism and hospitality sector which was due to end on 31 March 2021 will remain at 5 percent until 30 September 2021. To help businesses manage the transition back to the standard 20 percent rate, a 12.5 percent rate will apply for the subsequent six months until 31 March 2022.