BARWELL'S BANTER: A final look at the March Budget
Here’s our final summary of some of the issues from This March’s Budget.
The chancellor announced that the main rate of corporation tax will remain at its current level of 19% until March 31, 2023. From April 1, 2023, companies with profits in excess of £250,000 will see the main rate rise to 25%. A small profits rate will come into force for companies with profits below £50,000 which will be charged at 19% and those with profits in
between £50,000 and £250,000 will pay tax at the main rate of 25%, reduced by marginal relief, giving a tapered rate between the two levels.
This is a temporary measure between April 1, 2021 and March 31, 2023 which allows companies investing in qualifying new plant and machinery to benefit from a 130% first year capital allowance. If an accounting period straddles April 1, 2023 then the rate will need apportioning appropriately. Furthermore, a 50% first year capital allowance will apply for most qualifying new special rate assets. This relief is not available to unincorporated businesses.
Corporation tax loss relief
An extension to current period over which a company can carry back a trading loss to be relieved against profits in earlier years will come into effect for company accounting periods ending between April 1, 2020 and March 31, 2022. The current carry back is one year and this will be
extended to three years. The loss relief carry back is subject to certain limits.
Reduced rate of VAT for hospitality
The reduced rate of VAT on certain supplies for hospitality, holiday providers and attractions admission were due to end on March 31, 2021 and have now been extended until September 30, 2021. This will be followed by a transitional rate of 12.5% for six months until March 31, 2022 before the rate reverts back to its original standard 20% rate.
Deferred VAT Payments
The government previously announced that VAT payments due between March 20, 2020 and June 30, 2020 could be deferred but must be paid back by March 31, 2021. However, businesses can now spread that payment over a maximum of 11 months by joining the VAT deferral new payment scheme. This scheme is open between February 23, 2021 and 21 June 2021 and enables businesses to pay the outstanding VAT over equal instalments. The later you join the less time there will be to pay and therefore the higher each instalment will be. Businesses must apply for this themselves through their government gateway account. Accountants are unable to make the application for businesses.