Chancellor Rishi Sunak Unveils 2021 Budget

A disappointing development (and not mentioned in the statement) is the removal of red diesel from construction in April 2022. The Treasury has just published a report, 'Reform of Red Diesel and other rebated fuels entitlement', in response to the comments received during last year’s consultation, including those from HAE. Very few changes are being made to the initial proposals. However, a new two-year ‘super-deduction’ allowance is being introduced for qualifying plant and machinery investment. While it may be a coincidence, HAE and others pointed out the lack of incentives to invest in often more expensive, but greener, alternatives. 

HMRC aims to reduce some of the familiarisation costs by carrying out further pre-implementation publicity to make businesses aware of the changes, including providing guidance to support businesses to ensure they comply with the new rules. 

HMRC will also allow some latitude to businesses during the transition to help them. So that businesses can use up red diesel taken in before the change, for example, HMRC will have the ability to ‘disapply’ the liability to seizure of fuel where they can be satisfied that the user has not taken red diesel into the fuel system after the change in rules for usage. For further 

Information the following documents are available; Reforms to the tax treatment of red diesel and other rebated fuels and Reform of red diesel and other rebated fuels entitlement.

The following is HAE EHA’s summary of main relevant measures announced by the Chancellor and information from the Budget bundle released after his speech. As ever, members should not rely on this summary in terms of making business decisions and should take professional advice.

Continued support for people and businesses during the Pandemic

• An extension of the Coronavirus Job Support Scheme 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.
• An extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September will support the housing market and protect and create jobs.
• A new mortgage guarantee scheme will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.
• £5 billion for new Restart Grants – a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
• 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.
• Extension of the Film & TV Production Restart scheme in the UK, with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
• Six-month extension of the £20 per week Universal Credit uplift in Great Britain, with the Northern Ireland Executive receiving additional funding to match the increase. A one-off payment of £500 to eligible Working Tax Credit claimants across the UK.
• 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.
• 750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.
• Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
• £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
• Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.
• More than doubling the legal limit for single contactless payments, from £45 to £100
• £300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia.
• 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.
• Maintaining the income tax Personal Allowance and higher rate threshold from April 2022 until April 2026.
• The rate of Corporation Tax will increase to 25%, but, in order to support the recovery, the increase will not take effect until 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.
• Maintaining inheritance tax thresholds at their current levels until April 2026.
• Fuel duty will be frozen for the 11th consecutive year.
• 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).
• Maintaining the Lifetime Allowance at its current level of £1,073,100 until April 2026.

• 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. Read more here.
• Temporary increase in annual investment allowance for plant and machinery, click here for details.
• Not included in the speech was confirmation that a new Plastic Packaging Tax will be introduced from April 2022, details here.
• Reforms to the rules that govern how companies raise finance on public markets, details here.
• Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
• A new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost.
• £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government's aim to generate enough electricity from offshore wind to power every home by 2030.
• £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
• Publication of the the government's ‘Build Back Better: our plan for growth'.
• Over £1 billion funding for a further 45 towns in England through the Towns Fund, supporting their long-term economic and social regeneration as well as their immediate recovery from the impacts of COVID-19.
• £135 million to progress A66 Trans-Pennine upgrade.
• 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.
• Heavy Goods Vehicle Levy collection of the levy will be suspended for a further 12 months from 1 August 2021. HGV Levy rates will also remain frozen in 2021 to 2022

The Budget confirms an additional £2.4 billion for the devolved administrations for 2021-22 through the Barnett formula. This is an additional £1.2 billion for the Scottish Government, £740 million for the Welsh Government, £410 million for the Northern Ireland Executive. The devolved administrations will also receive £1.4 billion of funding in 2021-22 outside the Barnett formula.

Scotland

• £27 million in the Aberdeen Energy Transition Zone and £5 million in the Global Underwater Hub in Scotland, the first stage in delivering the North Sea Transition Deal.
• Three Growth Deals in Scotland – Ayrshire, Argyll & Bute, and Falkirk – will receive funding more quickly.

Wales

• £4.8 million to support the development of a demonstration hydrogen hub in Holyhead, Anglesey.
• Up to £30 million for the Global Centre for Rail Excellence in Wales.
• Three City and Growth Deals – in North-Wales, Mid-Wales and Swansea Bay – will receive funding more quickly.

Northern Ireland

• Northern Ireland will benefit from the Corporation Tax exemption for the Northern Ireland Housing Executive, Northern Ireland's biggest landlord.
• Almost half of the £400 million New Deal for Northern Ireland funding has been allocated, subject to business cases, to: new systems for supermarkets and small traders to manage new trading arrangements; building greater resilience in medicine supply chains; promoting Northern Ireland's goods and services overseas; and supporting skills development.