We have to remind ourselves that Rishi Sunak has just delivered what is only his second Budget. Throughout the fiscal assault of Covid, the likes of which have not been seen since the Second World War, the Chancellor has become a familiar, almost friendly figure to the UK public, with his assurances on furlough and various support schemes.
When he stood up in Parliament today however, proclaiming the Government’s honesty and the UK’s need for fiscal resilience, he certainly had an air of authority and command as he introduced an array of policies which promised recovery on every front. Whilst at first glance, the Budget did seem to be delivering whatever the desired recovery would take, we want to delve into the detail to understand the implications for our clients.
What do those policies really mean for business? What do they mean for many of our hard-working, risk-taking clients who have hung on in there throughout the pandemic? We examine the practicalities below.
The support of individuals, particularly the self-employed, was expected. However, Rishi needs to balance the books, and there will have been an understandably sharp intake of breath from business leaders across the land at the mention of corporation tax rising to 25% by 2023. Taking this as our starting point, we have summarised the key points below for businesses.
Read our full furlough extension update
here. Our
fee protection schemes not only have 24/7 access to the business and legal helpline provided by Markel Law but also our legal portal, Law Hub, which includes templates and guidance around furlough to support you and your clients.
And for his last trick…
So far, so fairly unremarkable. Rishi’s rabbit out of the hat moment came shortly after the 25% corporation tax rate was unveiled, perhaps a case of potentially bad news followed extremely promptly by some good news to sweeten the pill! The super deduction was trumpeted as the ‘biggest tax cut in modern business history’, and it certainly took those business leaders’ minds off the rate of corporation tax, at least at first glance.
From the financial year 2021 onwards, businesses are to be encouraged into helping the UK’s investment-led recovery by receiving a huge boost to their spending. A ‘super-deduction’ will be in place for companies who invest in business assets. The Chancellor provided the example of a construction company spending £10m on equipment, and usually receiving capital allowances of 25%, ie £2.5m. No longer – with the super deduction, this expenditure is to be enhanced (much like R&D expenditure), meaning that the £10m would be grossed up 130% and the company in question would have a £13m tax deduction in the year of purchase.
Next steps
We have partnered with Alvarez & Marsal, one of the leading names in the industry to produce a webinar which will go into detail of what these changes mean for you and your clients and how Markel Tax can support you.
Pre-register here to be the first to know when this is live. Please do contact us on
0333 305 3667 to discuss any queries you have in the meantime.