Spring Budget 2021 – a summary for SMEs
To see the full list of new measures announced by Chancellor Rishi Sunak in the Budget, please click here.
Here is our summary of what we think are the most important points from the budget, affecting SMEs.
Corporation tax rates
- The Corporation Tax rate will remain at 19% until FY2022.
- From April 2023, the main rate of Corporation Tax will increase to 25%.
- Companies with chargeable profits of £50,000 or less are liable to tax at the current rate of 19%. This will be the Small Profits Rate (SPR).
- Companies with chargeable profits of £50,001 to £250,000 will pay tax at 25% but will have the benefit of marginal relief.
- The SPR will not apply to close-investment-companies.
- The Diverted Profits Tax rate will increase proportionally, from 25% to 31%.
Help to grow
Applications for the government’s ‘Help to Grow’ scheme announced in Budget 2021 have opened. The programme will help small and medium-sized businesses with digital and management training.
The Help to Grow scheme is divided between:
- Help to Grow: Management: an executive development programme to help improve business performance and growth potential.
- Up to 90% of training costs will be paid by the government.
- Help to Grow: Digital: free online advice
- Up to 50% off Software up to £5000 that could help businesses save time and cut costs.
New Penalties Scheme
Late submission penalties
A points-based Late submission penalty regime will replace existing late submission penalties for VAT and Income Tax.
- When a taxpayer misses a submission deadline, they will incur a point.
- Points accrue separately for VAT and Income Tax.
- A penalty of £200 is charged when the taxpayer reaches a points threshold based on the taxpayer’s submission frequency:
- Annual: Two points
- Quarterly: Four points
- Monthly: Five points
- Accrued points expire after 24 months where the taxpayer remains below the points threshold.
Late payment penalties
The Late payment penalty regime will be aligned across the main taxes.
- A first late payment penalty will be payable 30 days after the payment due date based on a percentage of the balance outstanding.
- No penalty will be payable if the tax is paid within 15 days of the due date.
- Tax unpaid after day 15 will attract a 2% penalty.
- Where tax is unpaid by day 30, the penalty increases to 4%.
- From day 31, a second late payment penalty is charged at 4% per annum, accruing on a daily basis based on amounts outstanding.
- Penalties will stop accruing where a Time To Pay agreement is reached.
- Penalties will not be charged where the taxpayer has a reasonable excuse for not making payment on time.
- There will be a right to appeal against points and penalties.
The new late payment and late submission penalty rules will apply as follows:
- VAT: accounting periods beginning on or after 1 April 2022.
- Income Tax (where business or property income is over £10,000): accounting periods beginning on or after 6 April 2023.
- All other Income Tax taxpayers: accounting periods beginning on or after 6 April 2024.
Coronavirus Job Retention Scheme (CJRS)
- The CJRS is extended to 30 September 2021.
- The scheme will continue in its current form until 30 June 2021.
- Employees will receive 80% of their normal salary for hours not worked.
- From 1 July 2021 employers will be asked to contribute towards the cost of unworked hours. These contributions will be:
- 10% in July 2021 (up to £312.50).
- 20% in August 2021 (up to £625).
- 20% in September 2021 (up to £625).
- The scheme will cease on 30 September 2021.
Self-Employment Income Support Scheme (SEISS)
- A fourth SEISS grant will be paid based on 80% of three months’ average trading profits, capped at £7,500 in total.
- This is paid in respect of February, March and April 2021.
- Individuals must have submitted a 2019-20 tax return by 2 March 2021 to be eligible.
- Other eligibility criteria will be as for the third SEISS grant.
- Claims can be made from Late April 2021 until 31 May 2021.
- A fifth SEISS grant will be made available over the summer covering May to September.
- The grant value will be determined based on a turnover test in the year April 2020 to April 2021.
- Traders whose turnover has decreased by 30% or more will receive the full grant worth 80% of three months’ average trading profits, capped at £7,500 in total.
- Traders whose turnover has decreased by less than 30% will receive a 30% grant, capped at £2,850.
- Claims can be made from late July 2021.
Recovery Loan Scheme
- The Recovery Loan Scheme will be available to businesses from 6 April 2021.
- Businesses will be able to access loans of between £25,000 and £10 million, with a guarantee of 80%.
- Businesses who have received support under existing COVID-19 loan schemes will be eligible.
- Restart Grants will be made available in England. These will be:
- Up to £6,000 per premises for non-essential retail businesses.
- Up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
- A further £425 million of discretionary business grant funding will be available from public authorities in England.
If you ever have any questions about the Spring Budget in relation to your business, please let us know. We are here to help.
Partnering Up – with Flagship Reporting
Is it even possible to get “Management Accounts” that are ACTUALLY USEFUL?
Introducing – Flagship Reporting
Flagship is the hip new kid on the block. It has a FANTASTIC range of features for businesses that will help give directors the best insights into their businesses, giving them the information they need to make the important decisions that drive their businesses forwards.
There are a range of other options out there – Spotlight, Fathom and Futrli to name a few, and if your business already has management accounts, you may recognise the structure of these reports – and even like them. But here’s why you might want a change…
There have often been limitations to the packages available to accountants when producing management information. Slow speed and a lack of functionality have led to long lead times and poor quality of information provided by accountants. I’ve heard many directors say they don’t understand why they paid their old accountants for management accounts, as they never actually learnt anything from them!
Sure, management information has grown infinitely better over the years with the advent of cloud applications like Xero and QuickBooks, and the best accountants out there can do a top-notch job creating a great set of management accounts. But having to find workarounds to the lack of functionality of the platforms available on the market affects the price and speed of producing those accounts.
At Xoba, we pride ourselves in being at the forefront of the latest technologies in the industry, always seeking out the best for our clients. If we see something that can benefit you, we let you know.
During my conversation with CEO of Flagship, Searle Goott, and Strategic Account Executive, Archie Leigh, we went through a live demonstration of the platform together.
And WOW is it fast!
With processing speed this good, you can be sure your accounts will be with you in no time.
Let’s not forget – timely accounts are CRUCIAL if you’re ever going to act on any information they hold.
Not only that, the functionality is excellent and it has a wide range of KPIs and an intuitive interface to help accountants make a truly tailored set of management accounts to suit the needs of any business.
We expect Flagship will really take off in the industry, and help to give accountants the tools they need to really help SME’s plan ahead and track the performance of important areas of their businesses.
Take a look at their demo video to see how your custom management accounts could look.
Imagine if you could have that sort of information at your fingertips when running your business!
Here at Xoba, we are taking full advantage of Flagship and are one of the earliest of adoptees.
Flagship connects directly to your Xero Account (and soon QuickBooks too), and with a little help from Xoba, we can draft you a fantastic report in as quickly as a day, for as little as £100.
Want to find out more?
Give us a call on 01772 367303 now and we’ll show you how Xoba’s Management Accounts Package can transform your business.
Introducing our new staff member
Introducing our NEW staff member and office mascot – LUCY.
Lucy’s main activities are boosting staff morale, shredding files and napping.