What does the budget mean for Financial Services?
After a turbulent 2020, the 2021 Spring Budget was marketed as the Budget that would protect jobs and livelihoods. Indeed, it was anticipated that the Chancellor would extend the COVID-19 business support packages and lay the foundation for future economic prosperity.
COVID-19 support packages
The Government is extending the CJRS for a further five months to the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May, and June. From July, the Government will introduce an employer contribution of 10% in July, and 20% in August and September.
Within the announcement, there was also mention of a new £100 million Taxpayer Protection Taskforce to combat fraud within COVID-19 support packages, including the CJRS and SEISS, representing one of the largest responses to a fraud risk by HMRC.
The extension of furlough plus the business rates and VAT deferral scheme is welcome news and a big win for many businesses, but we would still advocate a relief package for some businesses whose cashflow and profits have been negatively affected where furlough of staff was not suitable for their business.
Overall, our sector of financial services has done well, especially from recurring income of investments where the market bounced back remarkedly well and mortgages and protection sales have been high from the stamp duty holiday. Good news for Estate Agents and Mortgage Advisers is that the property market should continue to be buoyant as the £500,000 nil rate band has been extended and will not end on 31st March but instead on 30th June. From 1st July the nil rate band will be £250,000 until the end of September and will only return to the normal level of £125,000 from 1 October.
Self-Employment Income Support Scheme (SEISS)
The Government confirmed that eligible self-employed workers will be able to receive two further grants. The fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April and can be claimed from late April. Meanwhile the value of the fifth and final grant will be determined by a turnover test.
These grants will go some way in supporting the self-employed, however, they offer nothing to the 1 million+ people who have fallen through the cracks when it comes to Coronavirus support. Amongst this group are directors of limited companies who are ineligible for SEISS. Financial & Mortgage Advice firms are often run by company directors. No official scheme exists for limited company directors. There’s no cover for lost dividends, although many are lobbying for it. Many clients of financial advice firms will be similarly affected who run small limited companies.
Skills and training
The Government is introducing a £7 million fund from July 2021 to help employers in England set up and expand apprenticeships. At Premier Jobs UK we actively recruit and train our recruitment apprentices from level 2 to level 7, as well as being instrumental with helping fill vacancies for many financial services businesses seeking to recruit apprentices. Therefore, we are delighted to see more focus on apprenticeships to improve the skills gaps in financial services. The increased incentive of £3,000 for any age will be welcome.
Good news for firms wanting to invest in their business with qualifying capital equipment with a 130% super deduction first year Capital allowance from 1st April 2021 until 31 March 2023 and a 50% first year allowance for qualifying special rate assets.
Two other new Government subsidised training schemes are being introduced to help businesses upskill management and how to improve online capability:
Help to Grow: Management – This June, small businesses will be able to access a 12 week-programme delivered by leading business schools across the UK. Designed to be manageable alongside full-time work, this programme will support small business leaders to develop their strategic skills with key modules covering financial management, innovation and digital adoption. By the end of the programme participants will develop a tailored business growth plan to lead their business to its full potential. 30,000 places will be available over 3 years. The programme is 90% subsidised by government – participants will be charged £750. UK businesses from any sector will be eligible who have been operating for more than 1 year, with between 5 to 249 employees.
Help to Grow: Digital – This Autumn, small businesses will be able to get free impartial advice on how technology can boost their performance through a new online platform. Eligible businesses will also be able to get a discount of up to 50% on the costs of approved software, worth up to £5,000. Vouchers are initially expected to be available for software that helps businesses a) build customer relationships and increase sales, b) make the most of selling online and c) manage their accounts and finances digitally. The voucher is expected to be available to UK business that employ between 5 and 249 employees and are registered at Companies House; have been trading for more than 12 months and are purchasing the discounted software for the first time. The participant should be a decision maker or member of the senior management team within the business e.g. Chief Executive, Finance Director etc.
Tax
As feared the Government revealed that to balance the spending, they will:
Freeze the income tax personal allowance and higher rate threshold from 6 April 2022 until 5 April 2026.
Freeze at their current rates the capital gains tax annual exempt amount, the pensions lifetime allowance and the IHT and residence nil rate bands.
The good news for retiring IFAs is that Entrepreneur relief was not affected. Our Acquisitions team are already busy with an upsurge in IFAs seeking the sale of their business to start retirement.
Meanwhile Corporation tax will increase from April 2023 to 25% on profits over £250,000. However, Small Profits Rate held at 19% for the financial year beginning 1 April 2023 for profits up to £50,000 with a taper between the two amounts.
Next steps
If you are wanting support on recruitment of Trainees through to experienced Advising or support staff please call our Recruitment Team on 0208 0044 154. For Advisers seeking retirement or firms looking to expand and purchase businesses call our Acquisitions team on 0208 0044 162. We look forward to receiving your call or email to [email protected]
Managing Director of Premier Jobs UK