March 2021 UK Budget measures that impact Scottish social enterprises

Posted: 03 March 2021, in News

Rishi Sunak, the UK Chancellor of the Exchequer delivered his 2021 budget today Wednesday March 3rd, 2021. We are sharing an overview of the key measures that will impact Scottish social enterprises below, and you can read the full UK budget document online here.

Social Investment Tax Relief (SITR) extension to support social enterprises in the UK that are seeking growth investment by extending the operation of SITR to April 2023. This will continue availability of Income Tax relief and Capital Gains Tax hold-over relief for investors in qualifying social enterprises, helping them access patient capital. This measure will be legislated for in Finance Bill 2021, and a summary of responses to the consultation held in spring 2019 will be published on 23 March.

An extension of the Coronavirus Job Support Scheme (furlough) to September 2021 across the UK.

An extension of the UK-wide Self Employment Income Support scheme to September 2021 with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.

A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.

Corporation Tax will increase to 25%, still the lowest rate in the G7, but taking effect in 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.

A £150 million Community Ownership Fund will allow communities across the UK to invest to protect the assets that matter most to them such as pubs, theatres, shops, or local sports clubs.

Six-month extension of the £20 per week Universal Credit uplift in Great Britain (different arrangement for NI), worth £1,000 a year. A one-off payment of £500 to eligible Working Tax Credit claimants across the UK.

Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22.

Extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.

Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.

To further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company.

Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).

Beginning April 2021, the new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.

A new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost.

National ‘Living Wage’ (to be changed to those aged 23+ instead of 25+) and the National Minimum Wage from 1 April 2021: £8.91 for 23 and over, £8.36 for 21 to 22 years old, £6.56 for 18 to 20 years old, £4.62 for under 18 years old, £4.30 for apprentices.