Budget 2021 – brief summary of the key points

Budget 2021 key points

Chancellor Rishi Sunak has unveiled the contents of his Budget today in the House of Commons. We will bring you more detailed information over the coming days but here is a summary of the main points:

Coronavirus support

  • The Furlough scheme to be extended until the end of September
  • Government will continue paying 80% of employees’ wages for hours they cannot work
  • Employers to be asked to contribute 10% in July and this will increase to 20% in August and September
  • Support for the self-employed also to be extended until September
  • The 4th SEISS grant will cover February to April, worth 80% of average trading profits up to £7,500.
  • A 5th SEISS grant will be available from July.
  • 600,000 more self-employed people will be eligible for help as access to grants is widened
  • Universal Credit top-up of £20-per-week will continue for a further six months
  • Working Tax Credit claimants will get £500 one-off payment
  • Minimum wage to increase to £8.91 an hour from April

Economy

  • 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

Tax

  • No changes to rates of income tax, national insurance or VAT
  • Personal income tax allowance to be frozen at £12,570 from 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
  • The stamp duty holiday on properties worth up to £500,000 will be extended from the end of March until the end of June and after that there will still be no duty on homes worth up to £250,000 for another three months. The threshold will return to the usual level of £125,000 from October
  • No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances

Health/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

Arts/Sport

  • There is £400m to help arts venues in England re-open which includes museums and galleries
  • £300m for professional sport
  • £25m for grassroots football

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 costs by 130%
  • Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships
  • Reduced rate of 5% VAT for the hospitality and tourism sectors has been extended to the end of September, and will increase to 12.5% after that, before returning to 20% next April
  • The 100% business rates holiday in England will continue from April until June with 75% discount after that
  • £5bn of new grants for hard-hit firms – worth up to £6,000 for non-essential retailers and £18,000 for restaurants, pubs, personal care and gym businesses which will reopen later
  • 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

Alcohol 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 tenth consecutive year

Nations/regions

  • £1.2bn in funding for the Scottish government, £740m for the Welsh government and £410m for the Northern Ireland executive
  • 750 civil servants to be relocated to new Treasury campus in Darlington
  • £1bn Towns Fund fund to promote regeneration in 45 English towns
  • £150m for community groups to take over pubs at risk of closure
  • First eight sites for freeports in England announced

Housing and infrastructure

  • The government will guarantee 95% mortgages to help those who can only afford a 5% deposit to help people get on the housing ladder
  • New UK Infrastructure Bank will be set up, in Leeds, with an initial capitalisation of £12bn – to finance public and private sector “green industrial revolution” projects

If you have any questions on the 2021 Budget, please do not hesitate to contact us.

Source: www.bbc.co.uk/news

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