FINANCIAL ADVICE

SPRING BUDGET, COVID AND TAXES

I hope that the readership remains well and that spirits are lifting along with lockdown restrictions. It seems from a COVID perspective that we have some light at the end of the tunnel although caution remains.

Financial advice by Dean Flood | www.rowlandhall.co.uk

Since my last article we have received the Spring Budget announcement from the Chancellor, Rishi Sunak, on 3rd March. In the weeks preceding the budget announcement there were concerns as to whether Mr Sunak would seek to recover the substantial spending on COVID support schemes by way of radical changes to some tax rates or reliefs. However, areas such as Capital Gains Tax and Inheritance Tax remained largely untouched. In most cases, rates of tax remained consistent as did reliefs available, although inflationary pressure against the backdrop of frozen allowances, will provide more subtle gains in the tax yield for the Treasury.

Corporation tax. One area that saw some marked attention from the Chancellor was corporation tax. announcement that the headline corporation tax rate of 19% would be increasing to 25% for larger companies as from the 1st April 2023. Small companies with taxable profits below £50,000 per annum would remain at the 19% rate. Larger companies with taxable profits over £250,000 would pay the headline rate of 25%. Those companies with profits somewhere in between those two figures will pay a marginal rate dependent on the profit level, but somewhere between 19% and 25%.

In recognition of the difficult trading conditions since early last year, companies with accounting periods ending between 1st April 2020 and 31st March 2022, can now carry back losses up to 3 years, extending the usual oneyear rule. Similar offerings are made to un-incorporated businesses. There are, however, limits as to the amounts to be carried back. in relation to expenditure on capital items. For the type of expenditure that usually qualifies for the 18% main rate pool capital allowances (eg commercial vehicles, plant and equipment), a deduction of 130% of the cost would be available against taxable profits. Companies would also continue to have access to the Annual Investment Allowances. These new rules apply for assets acquired between 1st April 2021 and 31st March 2023. The rules only apply to incorporated businesses and there are detailed rules as to what assets qualify, when the assets are deemed to have been acquired and how to account for the tax position on disposal. If your business is considering any degree of capital expenditure, it would be in your interests to discuss these proposals with your accounting or tax advisor.

Business loan schemes and grants The matter of COVID was still very evident in the Chancellors speech in 

which it was announced an extension to the business loan scheme with a new recovery Loan Scheme from the 6th April 2021.

In addition, Restart Grants will be provided in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.

The Self-Employed Income Support Scheme (SEISS) will be retained through to the end of September with the fifth instalment available from late July.

There is also a continuation of 100% business rates relief for eligible retail, hospitality and leisure properties in England to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.

Full details of all continuing support is available through local authority websites and the main website for HMR&C.