Budget 2021 Headlines
Chancellor Rishi Sunak has delivered his Budget statement this afternoon. Please find a top line summary of the major announcements below:
- OBR forecasting a swifter and more sustained recovery than they thought in November.
- OBR expect the econ to return to pre- c ovid level by the middle of next year, six months earlier than previously thought .
- OBR say in 5 years time, the economy will be 3 percent smaller than it would have been
- OBR forecast economic growth by 4 percent this year, 7.3 percent in 2022, 1.7,1.6 and 1.7 in the last three years of the forecast.
- Unemployment expected to peak at 6.5 percent .
- All measures mean an additional £65bn of measures over this year and next to support the economy; total Covid support this year and next year stands at £352bn with the spending review included and £407bn with the spring Budget included.
- OBR fiscal forecast: this year Government has borrowed £355bn, 17 percent of national income; next year borrowing is forecast to be £234bn, 10.3 percent to GDP.
- Steps taken today means borrowing falls to 4.5 percent of GDP in 2022-23, 3.5 percent in 2023-24, 2.9 and 2.8 percent in the fallowing years; Debt peaks at 97.1 percent in 2023-24 before stabilising and falling slightly in the final two years of the forecast.
Business, Economy and Financial Services
- Furlough scheme extended until the end of September; as businesses reopen, employers would be asked to pay 10 percent from July and 20 percent in August and September.
- Support for the self-employed to continue until September, with a fourth and fifth grant; fourth grant three months support at 80 percent of average trading profits; fifth grant people will continue to receive grants worth three months of average profits with a system open for claims from late July .
- Self-employed people whose turnover have fallen by more than 30 percent will continue to receive 80 percent, whilst those whose turnover has fall by less will receive 30percent grant Provided they filed a tax return by midnight last night, self-employed can now claim the fourth and fifth grants
- Increase national living wage to £8.91 from April .
- A new restart grant in April: non-essential retail businesses which opens first up to £6,000 per premises; hospitality and leisure businesses including personal care and gyms which open later up will receive up to £18,000; £5bn in new grants in total.
- Extending the temporary reduced VAT rate for hospitality and tourism.
- A new recovery loan scheme for businesses of any size can apply for loans for £25,000 up to £10m until the end of this year and the Government will provide a guarantee to lenders of 80 percent .
- Business rate holidays to continue until the end of June, for the remaining of the year rates will be discounted by two third up to a value of £2m for closed businesses and a lower cap for those that have been able to remain open.
- Extending the temporary reduced VAT rate for hospitality and tourism for six months to the 30 of September; after, an interim rate of 12.5 percent, not returning to the standard rate until next April.
- A mortgage guarantee for 95 percent LTV mortgages from next month .
- Freeze personal tax thresholds. Tax free allowance frozen at £12,570 next year until 2026 and higher rate level goes to £50,270 then freezes.
- Increasing corporation tax on company profits to 25 percent from April 2023; small profits rate maintained at the current rate at 19 percent – around 70 percent of companies will be completely unaffected; a taper above 50,000 so only businesses with profits of a quarter of a million pounds or greater will be taxed at the full 25 percent rate.
- Freezing inheritance tax, Capital Gains Tax, Pensions lifetime allowance until 2026 .
- Companies will be able to reduce their tax by 25p for every pound they invest, under the 130 percent super-deduction
- Freeze personal tax thresholds. Tax free allowance frozen at £12,570 next year until 2026 and higher rate level goes to £50,270 then freezes
- Increasing corporation tax on company profits to 25 percent from April 2023
- For two years from April 2022, the VAT registration threshold freezes
- tax treatment of losses more generous: allowing companies to carry back losses of up to £2m for three years providing a cashflow.
- Review the bank surcharge to make sure the combined rate of tax on UK banks does not increase significantly and they remain internationally competitive .
- To drive business investment: the super deduction, for the next two years, when companies invest they can reduce their tax bill by 130 percent of the cost.
- Alcohol duty will remain frozen for the second year in a row, saving consumers £1.7bn over the coming years.
- A new retail savings product – a green savings bond
- Future Fund Breakthrough to unlock capital from pensions funds and direct it into innovative ventures
- £1.6bn to continue the roll out of vaccine and improve future preparedness
- Through the Barnett formula, the decisions taking in this Budget increase the funding for the devolved administrations, by £1.2bn for the Scottish government; £740m for the Welsh government; And £410m for the Northern Ireland executive.
Digital, Culture, Media and Sport
- The Coronavirus Job Retention Scheme will be extended until the end of Sept. Employees will continue to receive 80 per cent of their pay. From July onwards, companies will have to contribute to the scheme, increasing by 10 per cent per month.
- Self-employment scheme extended until Sept. 4th grant will cover Feb-Apr, 5th grant will be available from July. Now newly self-employed can claim grants, as long as they submitted the relevant paperwork by midnight 02/03/2021
- Doubling incentive payments given to businesses to £3k. Businesses will receive £3,000 for each new apprentice hired between 1st Apr-30th September. An additional £126m for traineeships in England
- Restart grant to be issued in April. Non-essential retail will receive grant of £6,000 per premises.
- Leisure, gym etc. will receive £18,000 in grants – totalling 25m
- £300m to extend to Culture Recovery Fund.
- £300m to back clubs and governing bodies across a wide range of sports in England
- 100 per cent business rate holiday extended until end of June. For the remaining 9 months, a 2/3 (66 per cent) relief will be offered to businesses. This is worth over £6bn in 2021-22
- Reduced VAT rate for hospitality and tourism is extended.
- Income Tax personal allowance increased to £12,570 from April 2021. Will be maintained at that higher level until April 2026
- Corporation Tax issued on company profits will increase from 19 per cent to 25 per cent in April 2023. Companies with profits under £50,000 will remain at 19 percent, meaning only 10 percent of companies will pay the higher rate
- £150m fund to help communities take ownership of pubs, theatres, shops, or local sports clubs at risk of loss
- A new restart grant will be provided in April to help businesses reopen. Non-essential business will receive grant of up to £6,000 per premises; hospitality and leisure businesses will receive up to £18,000.
Education and Skills
- Increasing cash incentives to £3,000 for businesses taking on apprentices of any age.
- £126m of new money to triple the number of traineeships.
- Help to Grow: Management will help tens of thousands of small and medium sized businesses get world-class management training. Dozens of business schools across the UK will offer a new executive development programme with mentoring and peer learning, and government will pay 90% of the cost.
- Launching two wide-ranging consultations today: to make sure our research and development tax reliefs and Enterprise Management Incentives are internationally competitive.
- New ‘Help to Grow: Digital’ scheme will provide free expert training for small business digital skills, and a 50 percent discount on new productivity enhancing software worth up to £5,000
Environment, Food and Rural Affairs
- An updated monetary policy for the Bank of England, which reaffirms their 2 percent target, but now it will also reflect the importance of environmental sustainability and the transition to net zero .
Energy and Utilities
- Funding for new port infrastructure to build next generation of offshore wind farms
- UK to launch world’s first sovereign green savings bond for retail investors, allowing savers to drive the country’s transition to net zero
- Launch of new group to establish the City as global leader in voluntary carbon offset markets
- £19m for Domestic Violence Programmes to reduce reoffending, and the Government will begin a network of respite rooms.
Foreign Affairs, Defence and International Development
- Additional £10m to support veterans with their mental health .
- Under current plans, the funding to support survivors of the Thalidomide scandal runs out in 2023. This will be extended with extra funding with an initial down payment of around £40m; and a lifetime commitment, guaranteeing funding forever.
- New plans to help attract top level talent from all around the world through a new consultation into R&D.
- New visa programme for international scientists and high skilled technicians.
Housing, Communities and Local Government
- The cut in stamp duty will be extended to the 30th of June. Afterwards, the until rate band will be £250,000 until the end of September.
- A new policy for home buyers through a mortgage guarantee scheme. Lenders who can only afford a 5 percent mortgage will have Government support. Various banks will be offering these five percent mortgages will start lending help from next month.
- £1bn for 45 new Towns Deals.
- A new Treasury economic campus in Darlington to help level up the country.
- First Round of level up fund launched
Home Affairs and Justice
- New unsponsored points-based visa .
Transport and Infrastructure
- The UK Infrastructure Bank will have an initial capitalisation of £12bn, and is expected to support at least £40bn of total investment in infrastructure.
- Following a successful bidding process, 8 Freeport locations have been selected across England – East Midlands Airport. Felixstowe and Harwich. Humber. Liverpool City Region. Plymouth. Solent. Thames. And Teesside. a unique approach to free ports: simply planning, infrastructure funding, cheaper customs with favourable taxes, VAT or duties and lower taxes
- Fuel duty frozen for 11th consecutive year
- F unding for the Holyhead hydrogen hub, The Global Centre of Rail Excellence in Neath Port Talbot, and the The Aberdeen Energy Transition Zone .
Welfare and Social Care
- The Universal Credit uplift of £20 per week will be extended for 6 months.
- Working Tax Credit claimants will be provided with equivalent support, with a one-off payment of £500 due to the way that system works.
- The national living wage will rise to £8.91 from April, equivalent of almost £350 a year.