Spring Budget 2021Featured Products Promotional Features
Posted by: Dental Design 8th March 2021
Michael Lansdell is a founding partner at specialist dental and medical accountants Figurit and a chartered accountant. Here, he gives an overview of the Budget delivered on 3 March 2021.
Has there ever been such feverish speculation around a Budget? The days leading up to the Chancellor’s statement saw plenty of predictions, a lot of “will he/won’t he”, as well as a few announcements (partly) trailed in advance.
At the time of the last spring Budget, on 11 March 2020, we had begun to recognise the enormity of the situation that the world was facing. Mr Sunak has always said he would do “whatever it takes” to mitigate the damage caused by the pandemic, and he repeated this on 3 March 2021.
The vaccine rollout has given us much to be positive about and that optimism should filter down as we make our journey back to normality. For dental practice owners, like all business owners, the future will be about balancing a positive mindset with a realistic appraisal of the challenges ahead. The UK economy shrank by 9.9% in 2020 but, Mr Sunak said, it will recover more quicky than previously thought, although it is likely to still be 3% smaller in five years’ time, had Covid not happened.
With that context, and without further ado, here is my summary of what the Budget could mean for you.
Although it had been known that furlough, officially the Coronavirus Job Retention Scheme (CJRS), was to be extended again, this still grabbed the headlines. Safeguarding jobs has been a lynchpin of the government’s Covid strategy and, at the end of January the CJRS was covering 4.7 million employments, with a cumulative cost of nearly £54 billion.
- The scheme will be extended in full until 30 June 2021, with the government able to cover up to 80% of employees’ current salaries for hours not worked, capped at £2500 a month.
- From July, the CJRS will be phased out, with government payments being tapered off, to 70% in July and 60% in August and September when the scheme is set to end. The monthly cap will be reduced proportionally.
The Self-Employment Income Support Scheme (SEISS) has also been extended. A fourth SEISS grant, worth 80% of three months’ average trading profits, will be claimable from late April, to be paid in a single instalment and capped at £7500.
A fifth grant, claimable from late July, will cover the period from May to September. Eligibility criteria for both grants will broadly remain as before, but now anyone who became self-employed in the tax year 2019/20, who filed a return for that year, will be able to access the SEISS. Full details are on the government’s website.
Some tax rates in the deep freeze, but Corporation Tax rates facing a change
The personal allowance and higher rate threshold, the annual exemption allowance for Capital Gains Tax (CGT), also the Inheritance Tax nil rate threshold, and the pensions lifetime allowance will all be frozen at their current levels until April 2026.
What is to change, though, is the main rate of Corporation Tax (CT), which is set to increase to 25% from April 2023 for businesses who have profits of £250,000 or more. For companies of profits of £50,000 or less, the CT rate will remain at 19%; companies with profits between £50,000 and £250,000 will pay somewhere between 19% at the lower end and 25% at the upper end.
Tax credits for Research & Development (R&D)
For accounting periods beginning on/after 1 April 2021, the amount of payable R&D credit that a small to medium enterprise (SME) can receive in any one year will be capped at £20,000 + three times the company’s total PAYE/NIC liability. As most dental practices will be considered a SME, check if you’re entitled to a R&D tax credit.
There is also a super-deduction for investment in new plant and machinery, made between 1 April 2021 and 31 March 2023 – could you benefit from these attractive first year capital allowances? Talk with your specialist dental accountant for advice.
Finally, I’ll mention a new recovery loan scheme, open to businesses who have already received support under one of the existing Covid guaranteed loan schemes. It will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million.
Good preparation relies on acquiring the right knowledge and careful, yet pragmatic planning. We have all been on a steep learning curve and you may have found reserves of resilience you never knew you had! It is time to look forward and, here at Figurit, we will help you take the lessons of the past year and use them to grow your practice.
For more information, please visit https://figurit.com
or call Figurit (formerly known as Lansdell & Rose) on 020 7376 9333.
Author: Michael Lansdell – Business Director
Michael is a specialist Dental Accountant and Tax Advisor with strong technical and communication skills. Completing his training with international accounting firm Deloitte he then became a founding Partner at Figurit (formally Lansdell Rose). Michael combines a strategic approach with high attention to detail and is focused on saving his clients tax over both the short and long term, using robust tax-saving vehicles and tax efficient business structuring.T: 020 7376 9333 E: firstname.lastname@example.org
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