Blake Morgan Partner and corporate tax expert Cathy Bryant has written an article reviewing the 2021 Budget that was first published in Business Matters Magazine on 8 March.
Chancellor Rishi Sunak has clearly turned his mind to how the economy starts to trade its way out of the mountain of debt accrued to support businesses during the Coronavirus pandemic.
Whilst we will all be paying more tax, there is a lot in the Budget for small businesses to be pleased about.
At the end of March 2021, many Government-backed coronavirus loan schemes come to an end.
In an effort to stop the gap, the Recovery Loan Scheme comes into effect from 6 April 2021. It enables lenders to provide finance to UK businesses with a government-backed guarantee of 80% on loans between £25,000 and £10 million.
To help businesses with the task of reopening, Restart Grants will be available with effect from April 2021.
Looking ahead in the Budget 2021
Corporation tax is going up but not until April 2023 when it increases to 25% for companies with profits in excess of £250,000. A small profits rate of 19% will apply to companies with profits of £50,000 or less. For those companies that fall between £50,000 and £250,000, marginal relief will be available so that the increase in corporation tax between the upper and lower limit is gradual.
Further relief is available in trading loss carry-back rules which will be temporarily extended from one year to three years. This means that businesses can carry trading losses arising over the pandemic back to relieve profits in earlier years. This relief has effect for accounting periods ending in the period 1 April 2020 to 31 March 2022.
Read the Budget 2021 review in full here.
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