Only Some Small Businesses and Self-Employed Helped in Budget 2021

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They budget hasn't done anything for 3 million self-employed small business owners in the UK

As the dust settles on a Chancellor’s Budget speech that was more an animated short, rather than the summer blockbuster we all hoped for, there is a sense of relief for the majority of self-employed and small business owners around the UK. But there are still over 2 million self-employed and small business owners that are shaking their heads in further frustrations as quite simply, nothing has changed.

With the UK tax burden at it’s highest since the 1960’s you’d be forgiven in thinking that there is a ton of cash splashing around. But for up to 3 million UK Taxpayers there is no relief, no respite and as importantly, no cash.

Marc Ford

Marc Ford

Editor-in-Chief, Business Media Owner, Business Coach, Author and Keynote Speaker. Works with over 100's of small businesses every year. Trusted by BBC TV and Radio, Channel 4, Mercedes Benz, Hitachi Capital on business matters.
Who Are These People?

According to ExcludedUK, a non-profit organisation set up last year to champion the needs of excluded self-employed and small business owners, there are somewhere in the region of 3,000,000 people receiving little or no support through the pandemic.

ExcludedUK is a grassroots volunteer-run not-for-profit organisation working towards bringing about an end to the exclusions in the UK Government’s Covid-19 financial support measures across all employment statuses, circumstances, professions and industries. These exclusions have led to significant disparities within the support offered, resulting in unfairness, injustice, discrimination and severe hardship for those affected.

Covid-19 and the ensuing lockdown presented the most unforeseen challenges to many individuals and businesses across the UK. While government support packages have provided much needed support for many, there remain some 3 million taxpayers – 10% of the UK workforce, who have found themselves excluded from meaningful support, leaving large cracks within these measures.

Excluded UK is a Group That Has Been Set Up to 'Challenge' the UK Government on The Estimated 3million Self-employed Business Owners That Haven't Received Support During The Pandemic - YBKBS Small Business News for Smart Business Owners
Excluded UK is a Group That Has Been Set Up to 'Challenge' the UK Government on The Estimated 3million Self-employed Business Owners That Haven't Received Support During The Pandemic
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Sadly it can be heard, when the challenged the Prime Minister saying that the Westminster Leader of the SNP is ‘talking rubbish’ when challenged about those that are going without

Are The Government Listening?

Whilst it’s very easy to take aim and fire at the Chancellor, Rishi Sunak has made ‘Herculean’ efforts in trying to support UK Business. Not since World War 2 has a member of Government had to make such important decisions and at some pace, (when you think about how Public Services usually work).

The chancellor’s first package of measures were unveiled at the start of the pandemic in March last year. If they suffered a loss in income, people who were self-employed or in partnerships were paid a taxable grant worth 80% of their profits, up to £2,500 per month. It was available to those who had been trading in the financial year 2018-2019, and were planning to continue doing so, but whose business had been hit by coronavirus.

Help was initially given as one lump-sum payment to cover three months. Over the summer a “second and final” payment was announced covering 70% of profits, up to a cap of £2,190 per month for another three months – £6,570 in total. It proved not to be the final payment, but the second of four. The third, (not so final), payment covered 80% of profits for November, December and January, up to a total limit of £7,500 – paid in a single instalment. Applications for this grant have now closed.

But despite his announcement of an estimated 600,000 self-employed workers now being able to claim money, the reality will be very different. It’s unusual for a business to make Any profit in it’s first year, so baring that in mind, if you are a self-employed small business owner who made no profit in 2019-2020 you’ll get 80% of that profit…which is still nothing. See the flaw?

Unfortunately it continues to show a clear lack of understanding and focus on small business in the UK and the hugely important role they have for the British economy, generating around 40% of GDP. And as larger businesses, especially on the High Street, have collapsed it will be those same businesses that perhaps were treated as an afterthought, that will get the UK economy back on its feet again.

Small Business and Those Excluded Are Waiting To See What Help is Available in Today's Budget - YBKBS Small Business News for Smart Business Owners Rishi Sunak
The Chancellor - Not Everyone's Favourite This Morning - Especially If You're in The 3 Million
What Was In The Budget For Business Owners?

Despite all of this there were some highlights for businesses and here’s a quick summary of what was in the Chancellor’s Budget for the self-employed and small business owner:

  • Furlough scheme to be extended to end of September 2021 at 80% of salary / wages for hours not worked. From July employers will contribute 10%, for September & August it will be a 20% contribution.
  • Corporation tax will rise in April 2023 from 19% to 25% for companies making profits over £50k per year.
  • For profits from £50k to £250k there will be taper, meaning only the bigger companies will pay the 25%.
  • Hospitality & tourism – VAT rate to stay at 5% until 30th September, then an interim rate of 12.5% for another 6 months, going back to 20% by April 22
  • Losses can be carried back 3 years with a tax refund to give a cash flow benefit
  • Apprentice hiring grant – this will be doubled to £3k for a new apprentice hire of any age.
  • New re-start grant – to help non-essential retail to re-open – grants of up to £6k per premises and up to £18k for those who open later
  • Business rates holiday extended to June 21, with a further discounted rate of 2/3 for the rest of the year. With a lower cap for those businesses who remained open.
  • Loans – BBL and CBILs finish in April and will be replaced by a new recovery loan scheme – for any business size, offering loans from £25k to £10m with the goverment providing a guarantee of 80%.
  • Self-employed support will continue to the end of September – a 4th grant for April to June and a 5th grant for July to September, again will be made at 80% of average profit. If turnover has fallen by more than 30% or more then the full 80% is available, if turnover fell by less than 30% then the grant is for 30%. Newly self employed who couldn’t claim before can now claim this 4th and 5th grant if they filed a tax return by last night.
  • Universal credit uplift will be extended for another 6 months to the end of September.
  • VAT registration threshold will stay at £85k until 2024.
  • National Living Wage increases to £8.91 from April.
  • No rises in PAYE, VAT or National Insurance
  • Higher tax rate to increase to £50,270 in 2021 then remain there until 2026
  • Inheritance tax, capital gains and pension allowances to remain the same until 2026
  • Fuel duty – no increase.
  • Contactless limit increases from £45 to £100
  • Capital investment “Super Deduction” – you can claim 130% of capital to fuel investment in growth
  • Help to grow management – 90% of new courses funded by business schools – a new exec development program
  • Help to grow digital – 50% to get expert training up to £5k

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Business Coach, Author and Consultant. Has worked with BBC TV and Radio and Channel 4 on business matters. Trusted by Mercedes Benz, Hitachi Capital. Keynote speaker.