Budget 2021

A year ago Rishi Sunak delivered his first Budget as Chancellor. That was against the pandemic just starting and events overtook it rapidly.

This year, with the pandemic appearing to be coming under control, he had a chance to lay out a future plan to restore the economy.


Here are some of the key points from our detailed newsletter.

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Support for the self employed

Announcement

Chancellor Rishi Sunak finally announced some support for the self employed in his 5pm briefing on 26 March 2020.

This was welcome news because so far little support had been announced for the self employed other than a deferral of the tax payment due on 31 July 2020 to 31 January 2021 and a VAT deferral for those self employed businesses that are VAT registered. Please note that for the purpose of this article the self employed does include partners in a partnership or LLP that operates a trade. It does not apply to directors of a Limited Company.

It is much more complicated to put in place a scheme for the self employed than for employees but they have tried. The points below are based upon what we know today and details may change as the scheme design is put in place 

The scheme that has been announced works as follows:

  • HMRC will pay self employed individuals 80% of their average monthly profits over last three years, up to a maximum £2,500 per month
  • Average profits for that period must be under £50,000 (NB if your self employment started less than 3 years before 5 April 2019 it is the years of self employment that count)
  • The amount is taxable income (so will need to be shown in the business trading accounts)
  • Only those in self-employment with a filed tax return for 2019 will be eligible for the Scheme. This excludes anyone who started self employment after 6 April 2019.
  • To be eligible the self employment income must be more than 50% of your total income
  • This scheme should cover 95% of the self employed
  • If you have not filed your 2019 tax return you have four weeks to do so and still qualify for the scheme.
  • The scheme is expected to be operational by June 2020.
  • There is no requirement for the self employed to cease working to qualify for this grant.
  • HMRC will contact you, if you qualify, and then they invite you to apply for the grant. There is no need to contact them.

There was a sting in the tail at the end of the Chancellor's announcement. He asserted that the reduced tax rates (actually NI rates) that the self employed get are likely to be aligned with those for employees. If the government are to offer some more permanent benefit rights to the self employed this does appear to be fair but we will wait and see what this means in practice at the next Budget in the Autumn.

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