CHANCELLOR UNVEILS CONTENTS OF BUDGET 2021

Chancellor Rishi Sunak has unveiled the contents of his Budget in the House of Commons.

Setting out the government’s tax and spending plans for the year ahead, Chancellor Rishi Sunak announced new measures to help businesses through the pandemic and to support the UK’s long-term economic recovery. He also announced a series of tax-raising plans to help rebalance the public finances. Harborne Village businesses might be interested to know that the Chancellor also announced plans to extend Furlough until the end of September, and to widen the eligibility for grants. New grants of up to £16,000 will also be made available for shops and businesses that have been forced to shut. Please see below a full summary of the main points set out today.  

Coronavirus support

• Furlough to be extended until the end of September
• Government to continue paying 80% of employees’ wages for hours they cannot work
• Employers to be asked to contribute 10% in July and 20% in August and September
• Support for the self-employed also to be extended until September
• 600,000 more self-employed people will be eligible for help as access to grants is widened
• Minimum wage to increase to £8.91 an hour from April
• £20 uplift in Universal Credit worth £1,000 a year to be extended for another six months
• Working Tax Credit claimants will get £500 one-off payment
• £5bn in Restart grants for shops and other businesses forced to close
• Non-essential retailers can claim a restart grant of up to £6,000 per premises
• Hospitality, leisure, personal care and gyms can claim grants of up to £18,000

Business, digital and science

• Tax breaks for firms to “unlock” £20bn worth of business investment
• Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
• Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships
• VAT rate for hospitality firms to be maintained at reduced 5% rate until September
• Interim 12.5% rate to apply for the following six months
• Business rates holiday for firms in England to continue until June with 75% discount after that
• New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
• Contactless payment limit will rise to £100 later this year
• Business rates holiday extended to June

Taxation

• No changes to rates of income tax, national insurance or VAT
• Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026
• Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
• Corporation tax on company profits to rise from 19% to 25% in April 2023
• Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
• Stamp duty holiday on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000
• No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances

State of the economy and public finances

• UK economy shrank by 10% in 2020
• Economy forecast to rebound in 2021, with projected annual growth of 4% this year
• Economy forecast to return to pre-Covid levels by middle of 2022, with growth of 7.3% next year
• 700,000 people have lost their jobs since pandemic began
• Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted
• UK to borrow a peacetime record of £355bn this year.
• Borrowing to total £234bn in 2021-22

Health and education

• £1.65bn to support the UK’s vaccination rollout
• £19m for domestic violence programmes, funding network of respite rooms for homeless women
• £40m of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee
• £10m to support armed forces veterans with mental health needs

The arts and sport

• £400m to help arts venues in England, including museums and galleries, re-open
• £300m recovery package for professional sport and £25m for grassroots football

Alcohol, tobacco and fuel

• All alcohol duties to be frozen for second year running
• No extra duties on spirits, wine, cider or beer
• Fuel duty to be frozen for eleventh consecutive year