Rishi Sunak’s Budget Update

Rishi Sunak

The Dental Business Guide Podcast Episode | 3rd March 2021
Arun Mehra

Good afternoon. It’s Arun Mehra here on the 3rd March from the Dental Business Guide and I’ll be talking to you about the budget that was announced earlier today by Rishi Sunak. Now, there was a lot of expectation around this budget, with various bits of information being leaked before the budget. But now more details have emerged today and I’m just going to give you a quick summary of the key points that I think affect the dental sector in particular.

As more information comes out, I will be sharing more information on our websites and maybe on this podcast as well. 

So firstly, in respect to the Coronavirus support that’s available from the government – certainly furlough has been extended until the end of September and the government will continue paying 80% of employees salaries for the hours they cannot work.

Employers will have to then also contribute 10% in July and 20% in August and September. So, as we expected, this is something that will help businesses generally for people who’ve got people on furlough, which will pay for them. In addition, support for self employed will also be extended until September.

Now interestingly, I think we are coming out of this pandemic, by the end of June, hopefully, when all the restrictions will be lifted. But this is going to go to the end of September as businesses will reopen. So that, I guess, is a positive sign. 

Now in terms of the state of the economy, and generally about the finances, we saw the economy shrink by about 10% in 2020. There is an expectation of it to rebound. And the Treasury’s hoping in 2021, the annual growth rate will be around 4%, which will hopefully then grow even beyond that after 2021. 

Current borrowing at the moment just out of interest is around £234 billion for the period 2021-22.

Now, the all important area of taxation. I know a lot of our clients are always interested to understand what’s the impact on them, on their personal taxes, on their personal take home pay. There’s been no changes to the rates of income tax, National Insurance, or even VAT. The personal income tax allowance has been frozen at the current rate at 12,570 from 2022 all the way to 2026.

However, that’s likely to change I guess, as we go along – that’s a long time away to happen. In addition, high-rate income tax threshold has also been frozen at 50,270 until 2026 as well.

The area that has changed (and this is a significant) area is that corporation tax will be changing. So by 2023, the highest rate of corporation tax will be 25%. Now, what does that really mean? I suppose there’s a kind of a taper here. So that the companies that are earning a lower rate of tax will still be taxed at 19%. And that’s the vast majority of companies and those companies who are earning under 50,000 pounds a year. But companies who have a high profitability, they’re tapered up to the rate of 25%. So anyone earning in excess of profits of 250,000 pounds, I believe, will be taxed at 25%.

In addition on the tax side of things, the stamp duty holiday on house purchases in England and Northern Ireland had been extended to June, which was kind of what we expected as well. And there will be no changes on inheritance tax or lifetime pension allowances, or even capital gains tax – because I know there was a lot of concern about capital gains tax changing. And an entrepreneur’s relief perhaps being removed – that has not happened thus far in this budget.

And then I suppose finally some other aspects on the business side of things is government really wants to encourage business. That’s what kind of the message I got from this, whether it will have the impact of what it desires – that’s another story. But one of the things he’s trying to do is encourage people to invest in equipment, invest in infrastructure, invest in new items.

They’re saying if for instance, you’ve invested 10,000 pounds in equipment, you’ll be able to get 130% of that, 13,000 pounds worth of that, as a deduction in your tax bill. So that’s a huge incentive. If you’ve got to kit out a dental clinic or business, you’re doing a new surgery, there’s a huge investment opportunity or a tax opportunity to reduce your tax bill as well.

In addition, there’s the other area to look at – business rates. The holiday for that continues in England until June with, 75% discount after that. 

So, I suppose in summary, we are in a pandemic, still, I think they’ve tried to minimise the impact of tax rises on income tax personal, especially individual.

Inevitably, there will have to be some tax rises, that’s going to impact the larger corporates in a couple of years time.

I guess we will see and hopefully we will grow back. One last thing I haven’t mentioned is they want to encourage and train people in more business knowledge, business acumen to help businesses grow on the digital front and also in just general management side of things as well. 

So some new incentives and new schemes that are being launched there today, which are worth looking for. And you can find out about those on gov.uk/helptogrow

So in summary, an interesting budget. I suppose there will be some deductions and benefits for businesses out there. It’s good that income tax hasn’t risen. Corporate tax will be impacting on the larger businesses in a few years time.

Hopefully, this will encourage the economy to grow and to get back on its feet post pandemic. Now if you have any questions on this or want further detail, get in touch with me via the samera.co.uk website and I look forward to hearing from you soon. Okay, and check out our next podcast soon.

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