With the introduction of the ‘Super Deduction’ tax break, Freeports, stamp duty break extended until June, eco incentives, both the property and construction marketplaces are set to remain busy and stimulated over the coming months and year. As such, word from the property sector has generally been positive. So much so that opportunities can be created from many different elements of it. Here’s my round-up of Rishi Sunak’s Budget 2021 that I feel could be relevant to you over the coming months …
Looking for new commercial opportunities? Try the new Freeports first
The Government is introducing ten Freeports across the country which will be national hubs for global trade and investment across the UK. Interestingly these Freeports have one or more tax sites within which tax reliefs will apply. The Government is to extend Stamp Duty Land Tax relief on land purchases within Freeport tax sites in England where that property is to be used for qualifying commercial activity and a 10% rate of Structures and Buildings Allowance rather than the 3% rate that applies for businesses constructing or renovating structures and buildings for non-residential use. Again, greater tax relief for qualifying new plant and machinery assets for the full cost of the qualifying investment in the same tax period the cost was incurred and 100% relief from business rates on specific business premises within Freeport tax sites in England. Relief will apply for this expenditure to 30th September 2026 or completion before that date of the site.
In the nick of time
The Stamp Duty holiday caused a frenzy amidst the pandemic. People who put their homes up for sale during lockdown to find them being snapped up and sold within minutes, often over the asking price. In the case of city dwellers looking to escape to the country for more rooms and outdoor space, the price was offered without a viewing, or viewed via a third party agent who sourced the property and made the offer for them. The sheer backlog created for finance and legals to push all of these sales through has been immense. Those who have been sitting on the fence awaiting the Budget announcement will be able to move forward and complete purchases and sales.
Get savvy with the brand new Super Deduction
Perhaps most newsworthy is the introduction of the never been done before Super Deduction. Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first year capital allowances. Under this measure a company will be allowed to claim: a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily only qualify for 18% main rate writing down allowances.
There is also room for a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
Whilst this relief is not available for unincorporated businesses, most of our clients at MSP could benefit from this new aspect, just start planning your new purchases wisely!
Mortgage guarantee scheme
The government will introduce a new mortgage guarantee scheme in April 2021. This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of 5% on homes with a value of up to £600,000. Under the scheme, all buyers will have the opportunity to fix their initial mortgage interest rate for at least five years should they wish to. The scheme, which will be available for new mortgages up to 31 December 2022, is designed to increase the availability of mortgages on new or existing properties for those with small deposits. This presents a massive opportunity for those owning buy-to-let properties and wanting to sell. The Government is being strong in its wish to turn Britain into a country of homeowners not renters which creates a full open landscape for our developers.
Looking to expand your team and have the capacity to train on the job?
The government will provide an additional £126 million in England for high quality work placements and training for 16-24 year olds in the 2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
Good timing if you’re thinking of hiring a new apprentice, as the Government will extend and increase the payments made for this. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices.
From July 2021, the government will also introduce a £7 million fund to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers to benefit from the high quality long-term training that an apprenticeship provides.
Make savings across every aspect of your business. Starting with site van or truck?
From 6 April 2021, a nil rate of tax applies to zeroemission vans within the van benefit charge. In 2020/21 such vans have a van benefit charge at 80% of the standard flat rate of £3,490. A zero-emission van is a van which cannot in any circumstances emit CO2 emissions when driven.
Governments have provided varying amounts of discounts from the van benefit charge for zeroemissions vans since 2010. This policy mirrors that of the one which applied from 2010 to 2015 when there was no charge.
Corporation tax rates
As you’re aware, the main rate of corporation tax is currently 19% and it will remain at that rate until 1 April 2023. After then, the rate will increase to 25% for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate. We know this will affect many of our clients, however hopefully the loss can potentially be mitigated by savings in other areas of the Budget.
Wondering how to handle trading losses from Coronavirus?
The Government are being realistic about this too and are opening a temporary extension of the period over which businesses may carry trading losses back for relief against profits of earlier years to get a repayment of tax paid will have effect for company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020/21 and 2021/22 for unincorporated businesses.
Trade losses will be extended from the current one year entitlement to a period of three years, with losses being carried back against later years first. For companies, after carry back to the preceding year, a maximum of £2m of unused losses will be available for carry back against profits of the same trade to the earlier two years. This £2m limit applies separately to the unused losses of each 12 month period within the duration of the extension.