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On the 3rd March 2021, Rishi Sunak took the nation through the Spring Budget.
Over the last 24 hours, the Isotope team have been dissecting the announcements & focussing on what our superstar recruitment agency clients need to be aware of.
From what will impact them personally to what will impact their agencies for the next tax year & beyond. Oddly enough, the accounts team here at Isotope really enjoy it.
So what did Rishi announce & what impact does the Spring Budge have on a buiness onwer of a recruitment agency?
It was confirmed that Furlough would be extended to the end of September 2021. This will mean that there is no real change for employees, with 80% of salaries still being received for hours not worked.
With lockdown proposed to be fully lifted by the end of June, in our eyes, this is encouraging signs as it signals further support for businesses to assist with the challenges of the last 18 months to ensure a strong & stable end to 2021.
For recruitment employers, you will be expected to contribute 10% of the salary in July 2021 & 20% in August 2021 – a graduating system as we arrive at September 2021.
The introduction of the Recovery Loan Scheme replaces the Bounce Back Loans & CBILs that some recruitment agencies may have utilized as a result of the Spring Budget 2020. With the new scheme, any company (recruitment or otherwise) is able to claim support from £25k up to £10m until the end of 2021.
In keeping with the current exemptions, Rishi has extended the exemptions until June 2021 & then at two thirds of usual rates until the end of the 2021.
Welcome news to many of our recruitment agency clients who have already looked at utilizing the kickstart scheme. Rishi Sunak has committed to doubling the current incentives to £3000 per apprentice hire into your business. A great statement of intend & something we are advising all our clients to talk to their contacts at Isotope to help with.
As of April 2023, Corporation Tax will increase to 25% (6% above the current rates) for profits above £250,000. For recruitment agencies where the profits within the business are £50,000 or less, the rate will remain at 19%.
Above £50,000 there will be tapered rates for businesses (recruitment or otherwise) while only profits over £250,000 will be taxed at the full 25%. More information will be released over the coming days & the accounts team here at Isotope will be working hard with our recruitment agency clients to ensure that when it comes to submitting their Year End Accounts, the recent amendments are taken into account. It is also useful to note that losses can be carried back up to 3 years.
It has been confirmed that there will not be any increase to the current VAT rates, with specific extensions to the VAT cut to 5% for hospitality & accommodation; welcome news to our recruitment agency clients focussing upon the hospitality & catering markets. It has also been confirmed that the VAT rate will rise to 12.5% by September 2021 & increase back to 20% as of April 2022.
Remember if you would like to understand more about VAT & your recruitment start-up, be sure to check out our latest article detailing everything VAT!
A 4th grant has been made available, with a 5th grant becoming available from May 2021; it is important to note that each grant is worth 3 months average profits. For those self-employed where the turnover has fallen by 30% or more, they will be eligible to receive a grant worth 80% of their turnover.
In instances where turnover has fallen by less than 30%, the eligible grant will be worth 30% of turnover.
We know there is a lot to digest & to take in with the recent annoucements. So, if you’re a recruitment agency business owner keen to understand more about the Spring Budget & the impact this will have on you & your recruitment agency please do not hesitate to give one of the superstar team here at Isotope a call.
As we mentioned above, oddly enough, the accounts team here actually really enjoy talking about it! (We know, odd – right?).
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