Chancellor Rishi Sunak delivered his Budget 2021 statement in Parliament at 12.30pm this afternoon, his opening sentiments were:
“This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people. First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”
Below is our summary of the main measures announced in today’s Budget:
- The Furlough scheme is to be extended until the end of September. Nothing will change until July, employers will continue to able to claim the full 80% due to employees. From then, employers will need to contribute 10% in July and 20% in August and September.
- Support for Self-employed will also continue. The fourth grant will cover the period February to April and will provide support at 80% of 3 months profits, subject to caps similar to the previous SEISS grants. The fifth grant will be for the period from May, and there will be 2 tiers to this grant. Those whose income has fallen by more than 30% will receive 80% of profits and those whose income has fallen less than 30% will receive 30% of profits.
Most notably the fourth and fifth grant will be available to newly self-employed who submitted a tax return for 2019/20 by midnight on 2 March 2021, bringing an additional 600,000 people into the scheme.
- Universal credit uplift of £20 a week will continue for a further 6 months. Working tax credit claimants will also receive equivalent support for next 6 months, in the form of a one-off payment of £500.
- National Living wage will increase to £8.91.
- Incentive payments to businesses will double to £3000 for all new apprentice hires of any age.
- Business rates holidays will continue, with 100% relief for the first 3 months of year through to the end of June. The remaining 9 months will see business rates discounted by up to 2/3 for those who remain closed and a lower discount if they are open.
- Restart grants will be available for businesses in hospitality, accommodation, leisure, personal care and gym businesses in England. Businesses who are able to open in April will receive £6,000 per premises, and for businesses that open up later, up to £18,000.
- New recovery loan scheme will be introduced providing loans of £25,001 to £10million and asset and invoice finance between £1,000 and £10million to assist with recovery of businesses.
- The 5% reduced rate of VAT for hospitality, accommodation and attractions is to be extended to 30 September. It will then increase to 12.5% for a further 6 months to April next year when it will return to 20%.
- The Stamp duty ‘holiday’ in England and Northern Ireland will be extended to 30 June. This will then slowly transition back to previous rates. The 0% band will reduce to £250,000 until the end of September, and finally to the usual level of £125,000 in October.
- The government will also introduce a mortgage guarantee scheme. Lenders who can only afford 5% deposit will receive a government guarantee on mortgages up to £600,000 starting next month.
- To balance out the above the chancellor announced 2 measures in relation to tax for fiscal responsibility:
- He pledged that he would not raise the rates of income tax, national insurance or VAT. However, personal tax thresholds will be frozen, with the personal allowance remaining at £12,570 until April 2026, and the higher rate threshold at £50,270 again until April 2026. Additionally, the Inheritance tax threshold, pension lifetime limit and capital gains tax annual exemption will remain at the same level until 2026. The VAT registration threshold is also frozen for the next 2 years.
- The rate of corporation will increase to 25%, this won’t take effect until April 2023. For small companies with less than £50,000 profits (around 70% of actively trading companies) the rate of corporation tax will remain at 19%. A taper will be introduced above £50,000 to £250,000 before 25% rate begins.
- Businesses will be able to carry back losses of up to £2million for up to 3 years enabling them to claim additional tax refunds.
- The chancellor also announced a super deduction for the next 2 years. Companies who invest will be able to claim a deduction of up to 130% of capital expenditure on plant and machinery.
- Research and development tax credits will be capped for SME’s. Businesses will only be able to receive £20,000 (plus three times company’s total PAYE and NIC liability) in any one year.
- All alcohol duty is frozen.
- All fuel duty is frozen.
- “Help to grow” for businesses will provide management and IT training.
- Freeports will have simpler planning to allow them to build. They will also have favourable tariffs and lower taxes. 8 new Freeports will be launched in 8 English regions.
Please get in touch if any questions on the above, our detailed analysis will follow to cover all budget announcements.
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