Following our blog last week, Rishi Sunak has presented his 2021 Budget in the House of Commons. The Chancellor has announced the government’s spending and tax plans for 2021. He has set out new measures to aid business and employment through the COVID pandemic. Sunak also laid out plans to support the long-term recovery of the economy in these difficult times. As expected, he also highlighted a number of plans to raise taxes in an attempt to balance the huge debt as a result of the pandemic.
Here we look at some of the key budget highlights:
Support for sectors hit hardest by COVID in the 2021 budget
Recovery Loan Scheme – This replaces the Bounce Back and Coronavirus Business Interruption Loan Schemes. This makes loans available between £25,000 and £10,000,000 with an 80% government guarantee.
Restart Grants Scheme – Aimed predominately at Covid-hit firms such as retail, hospitality, leisure, personal care and accommodation firms. It provides them up to £18,000 to boost their chances of survival. Non-essential retailers can potentially get up to £6,000.
Business Rates Relief – Again aimed at the sectors which have been hit the hardest by Covid. Full relief has been extended by 3 months, and by two-thirds for the remaining 9 months of the year.
VAT Cut – Reduced VAT of 5% for the hospitality, attraction and accommodation sectors until September 2021. From October 2021 it will increase to 12.5% for an additional six months.
Stamp Duty Holiday – Sunak has extended the Stamp Duty Holiday for properties under £500,000 for another three months. The £500,000 nil-rate band has been extended until the end of June 2021. From July 1st, the nil-rate band will drop to £250,000 until September 30th 2021.
Mortgage Guarantee Scheme – The scheme is intended to help first-time buyers get on the property ladder. The Government will guarantee lenders, encouraging them to offer mortgages to the riskier 95% mortgages.
Furlough Scheme – This has been extended a number of times now. The latest extension, giving employers 80% of an employee’s salary, will be extended until 30th September. Employers will be required to give contributions to their wages from July. This will be 10% in July and 20% in August.
Self-Employment Scheme – This will be continued, with the main difference being the inclusion of people who became self-employed in the 2019-20 financial year. It is expected this will give an additional 600,000 people access to the scheme.
Universal Credit Boost – The payment was increased by £20 a week in the 2021 budget.
Corporation Tax – This will rise from 19% to 25% in April 2023 on firms with profits of over £50,000. It is suggested only 10% of UK companies will be hit with a higher tax rate.
Income Tax – Income Tax thresholds will be frozen until 2026. Next years planned increases will still take place.
Inheritance Tax Thresholds / Pensions Lifetime Allowance – Both of these schemes will remain the same for the next five years.
Super Deduction – In an effort to encourage business investment, the Chancellor will cut taxes by 25p for every pound invested. It is anticipated this will incentives £25 billion of investment into UK businesses over the next two years.
Alcohol / Fuel Duty – Increases to both duties were frozen.
Health and Education
Vaccination Rollout – £1.65 billion has been committed to supporting the UK vaccination rollout, plus an additional £50 million to boost UK’s vaccine testing.
Support for Armed Veterans – £10m has been given to support armed forces veterans with mental health needs.
Domestic Violence Programme – £19m funding given to the network of respite rooms for homeless women.
Thalidomide Scandal – Additional £40 million of funding for victims of the 1960s scandal.
Arts and Sports
Art Venues – £300 million to support arts venues including museums and galleries in England.
Professional Sports Recovery – £300 million package to support professional sport, plus an additional £25 million for grassroots football.
Women’s Euro Tournament – £1.2 million to support staging the delayed Euro tournament in 2022
World Cup 2030 – £2.8 million pledged to help Britain’s bid to host the 2030 World Cup.
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