BUDGET 2021: UHY NOTTINGHAM’S RESPONSE

Added by Love Business East Midlands | 4 March 2021

Ian Dickinson, tax director at UHY Hacker Young in Nottingham, said:

 

“The government’s announcement that East Midlands Airport is going to be granted freeport status – one of just eight places across the UK – is welcomed news for the region. It will bring investment trade and jobs to the area, while making it easier and cheaper to do business regionally – providing a much-needed boost to the local economy and lessening the impact of challenges faced by importers due to Brexit.

 

“From now until the rates rise in two years’ time, businesses will be able to plan profitability in a better way. Those businesses currently in strong financial positions will be better placed to take advantage of these lower thresholds. Cashflow planning for companies in relation to tax is now firmly back on the agenda, but it will need to balanced carefully with commercial needs and ensure that tax savings enjoyed in the short-term are not dwarfed by the subsequent rise in rates from 2023.

“The announcement that for the next two years, businesses will be able to carry back losses for three years means companies will be able to claim additional tax refunds of up to £760,000 – providing a significant cash flow benefit and taking firms back to the position they were in pre-Covid.

“Sunak’s super deduction policy will also aim to boost recovery and seems to be the most immediate advantage for businesses. Expected to last until March 2023, the policy will be especially popular with manufacturing, construction and utilities firms that rely heavily on machinery. Companies are already provided with a £1 million annual investment allowance for the next 12 months, which suggests that this policy is targeted towards bigger corporations to encourage additional spending to kickstart the economy. We would recommend that businesses planning to take advantage of this policy hold off until 1 April 2021 to make greater tax savings.

“As expected, the furlough scheme has been extended until the end of September. It will exist in its current form until July, when businesses will be asked to contribute 10% alongside the taxpayer, increasing to 20% from August through to the end of the scheme.

“Furlough being slowly wound down over numerous months will better prepare businesses for its full closure in September. We cannot emphasise enough the importance of planning ahead because once this financial support is withdrawn – having been in place for almost 12 months – companies are likely to feel its effect.

“The Budget seemed remarkably business-like. Most of the big announcements were trailed in advance, leaving few surprises. However, it was a shock that the Chancellor did not mention business asset disposal relief. The lifetime limit was reduced from £10m to £1m in last year’s budget – directly impacting people with deals in progress or planning on selling their businesses.

“Sunak’s focus on rates, rules and incentives, while designed to help ease the country’s transition out of the pandemic, means that tax simplification has moved even further away. Many people will welcome the freeze in income tax, National Insurance and VAT rates but the absence of an announcement on capital gains tax could just be a stay of execution until next time - so business owners should continue to plan their affairs”.

For more information on UHY Hacker Young, please www.uhy-uk.com or call 0115 959 0900

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