Today we answering the question “What does the Budget mean for me as a UK Clinic Owner?”
Let’s have look….. what is the big picture UK economy has shrunk by 10% and borrowing at its highest since war time. This will take time to recover from. This is going to a long term recovery process for the UK. But what we want to know is what it means for you personally as s clinic owner?
The BIG one! Corporation tax rises to 25% from April 2023
Currently it is at 19% so it is a big increase.
Whilst you might feel annoyed about this as you have been working hard to try keep your clinic open and corporation tax is increasing we need to consider the bigger picture… taxing business is a lot easier for the government to do than raising personal tax allowances. If the government raised personal tax right now it would be the death of them! So the government have to go to business to recoup and start repayment of some of the debt.
For those businesses who have profits of 50K or less corporation tax will stay at 19%, with a taper rate between profit of £50k to £250k. Rishi Sunak commented that over 70% of companies have profits of 50K or less which possibly means you corporation tax rate will remain the same. But this 70% figure is quite alarming in itself…… 70% of UK business have profits of 50K or less! This is too low, small businesses including your clinic form the backbone of the UK economy. It likely means the majority of clinic owners taking home less than if they remained working for someone else!! And this also is not ok as you have taken on a lot of risk and responsibility deciding to become a clinic owner.
Profit it a measure of business health and sustainability, meaning as your business gets healthier you might move in to high rate tax brackets meaning you pay more tax but you will be taking home more. We need more clinic owners to be in the higher tax brackets…. it is a measure of your business health and gives you choices on how you make an impact!!!!
At the end of the day this all means you have to raise your game as a business owner, get more profitable and more efficient and more effective!
Carry back losses for 3 years
If you have made any losses you can off set it against last 3yrs tax meaning tax refunds are available. You just need to tell your accountant you want to carry back losses over previous 3 tax years.
Personal tax thresholds frozen until April 2026
This is the amount you can earn which is tax free. After next years rise to £12570 it will be frozen until April 2026.
This is controversial as freezing it and not moving in line with inflation you essentially create a decrease. It is controversial as in 1977 an amendment was made stating that personal tax allowances have to increase inline with inflation. And this freeze goes against the amendment. So we will have to see if this is allowed to become law.
Is there going to be any support for directors of limited companies?
Short answer is no there is nothing additional.
Sole trader or in partnership. There will be a grant available as a % of profits. But none for directors.
Furlough extended to end of september
Employee will receive 80%, from July a contribution will be required which begins the tapering down of furlough. Remains to be seen of we start to see a rise in redundancies end of May/June time to ensure not on books come July.
National living wage
Increases to £8.21 from April 2021. So if you have any employees on living wage you will need to be working out salaries and factoring this is to for profit plans and forecasting. Remember every employee should have a positive impact on your bottom line
Previous incentive to businesses is doubling to £3000 from £1500
New restart grant
Starting in April….. If you clinic is in a gym not clear if you will be able to apply for the leisure industry and gym grant . I believe it will be based on business rates and will probably be administered through local authority.
New recovery loan scheme
Will replace CIL’s and bounce back loans. Will be available until end of 2021. 80% will be guaranteed to the lender by the government. This is similar to CILS, the big question is what the other stipulations will be. Are they available from all banks and will personal guarantees be required?
Business rates holiday
Will be extended to the end of June, and from July to Dec 2021 it will be decreased by 2/3rds.
Nil rate, only applicable in England. Nil rate extended to 30th June. Then will move to £250,000 level until end of september 2021. This is applicable for main residences making it relevant if you are thinking about moving house and getting a mortgage.
VAT threshold remains until 2024
This is unchanging but rarely affects Physio Clinic Owners as the industry is typically VAT exempt.
HMRC have been increasing investigations
They are wanting to recoup money and there will be a new HMRC task force for tax fraud and avoidance (which will mean more tax investigations). So we need to bare that in mind.
When a company investments super deductions of 130% of costs to encourage investments in business. Normally can offset investments by 100%. But basically get more tax allowance than spent. Not clear what the rules are and what an investment is deemed to be. What are the eligibility criteria? We have to wait and see.
UK wide schemes to support growth
Unclear how good this will be. Chancellor announced a new Help to Grow Scheme. Help to Grow Management and Help to Grow Digital. We will keep you posted on this as more information emerges. I believe it is always important to make sure any training is from entrepreneurs and small business owners.