March 2021 Budget Round-up

Following on from the announcement made by the Chancellor yesterday, PFM have pulled together a summary of the key areas we think will impact our dental clients.

1.Furlough Scheme

The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021.

The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.

For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.

You will need to continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. This means, for periods between July and September, you will need to fund the difference between this and the CJRS grants yourself. You can also top up wages above the 80% if you wish, but you are not required to do so.

You must continue to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from your own funds.

Eligibility for the scheme

For periods from 1‌‌ ‌May 2021 onwards, you will be able to claim for eligible employees who were employed by you and on your PAYE payroll on 2 March 2021. This means you must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying us of earnings for that employee. You and your employees do not need to have benefitted from the scheme before to make a claim, as long as you meet the eligibility criteria.

2. SEISS Grant

The SEISS grant has also been extended until September 2021 with HMRC announcing a fourth and fifth grant. HMRC will be contacting those eligible for the fourth grant from mid-April and providing details of how you can claim.

The fourth and fifth grants will take into account the 2019/20 tax return and will also be open to those who became self-employed in the 2019/20 tax year. This means that some of you may be able to claim, even if you were not eligible for previous grants.

To qualify, you must have filed your 2019/20 tax return by 2 March 2021, at the latest.

Fourth SEISS grant

The UK Government will pay a taxable grant which is calculated based on 80% of three months’ average trading profits, paid out in a single payment and capped at £7,500 in total. The value of the grant is based on an average of your trading profits for up to four tax years between 2016 to 2020, where available.

The grant will be available to claim by late April. As with previous grants, trading profits must be no more than £50,000 and at least equal to non-trading income in order to claim the fourth SEISS grant.

Eligibility for the fourth SEISS grant will depend on whether you experienced a significant financial impact from coronavirus between February 2021 and April 2021.

HMRC will take into account your 2019-20 return when assessing your eligibility for the scheme. This may also affect the amount of the fourth grant, which could be higher or lower than previous grants you have received.

For this period, you will need to make an honest assessment that there has been a significant reduction in trading profits due to reduced demand or your inability to trade. If you make a claim, you will need to keep appropriate records as evidence.

HMRC will contact you from mid-April if we believe you may be eligible for the fourth SEISS grant to tell you how you can claim. You will be provided with your personal claim date, which will be the earliest date you can submit a claim for the fourth SEISS grant.  

Claims for the fourth SEISS grant must be made by 31‌‌ ‌May 2021, at the latest.   

Fifth SEISS Grant

The UK Government has also announced that there will be a fifth and final SEISS grant, covering the period between May and September, which you will be able to claim from late July if you are eligible.

The amount of the fifth grant will be determined by how much your turnover has been reduced. The grant will be worth 80% of three months’ average trading profits, capped at £7,500, for those with a higher reduction in turnover (30% or more). For those with a lower reduction in turnover, of less than 30%, the grant will be worth 30% of three months’ average trading profits.

Further details will be provided on the fifth grant in due course.

3. Corporation Tax

For those of you operating as Limited Companies, the Chancellor announced a rise in the corporation tax rate.

The main rate of corporation tax will remain at 19% for the year beginning 1^st April 2022, but will rise to 25% from 1^st April 2023.

There is some good news however… a small profits rate (SPR) will be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will benefit from a taper relief so that your average rate of tax is between 19% and 25%. Once profits are over £250,000 you will pay corporation tax at 25%.

For Companies, an announcement was made to encourage investment.

At present, you can claim up to 100% of the cost of capital purchases. The budget detailed plans from 1^st April 2021 until 31^st March 2023 for a “super-deduction”, enabling companies to claim 130% of the cost of the qualifying capital asset investments made.

The personal tax-free allowance and higher rate threshold are both set to rise in line with Consumer Price Index (CPI). From April 2021, income tax levels will be frozen until April 2026.

Capital Gains Tax (CGT) was an area the industry was anticipating changes to be made, but this was unchanged.

We hope you find this budget update useful, but if you have any further questions – please contact your usual member of the PFM team!