The Chancellor of the Exchequer, Rishi Sunak, has announced the Government Budget for 2021, setting out the path for recovery. The full budget can be found here. Please see our summary below.
Chancellor Rishi Sunak has announced the following measures to support the economy during the pandemic:
- Extending the furlough scheme until the end of September, with employers contributing 10% in July and 20% in August and September.
- Extending support for the self-employed to September, with two further grants, targeting support at the most affected and including the newly-self-employed.
- Extending the Universal Credit uplift for six months and an equivalent for those receiving Working Tax Credits.
- Confirming other existing measures including increasing the National Living Wage, the Restart Programme, increasing work coaches, the Kickstart Scheme, the Lifetime Skills Guarantee.
- Doubling the incentive payment for new apprenticeships to £3000 and £26m to triple traineeships.
- A new Restart Grant will be introduced from April, paying up to £6000 to non-essential retail and up to £18,000 for hospitality, leisure, personal care and gyms, totalling £5bn.
- £700m to support the reopening of arts, culture, and sports, including a World Cup bid, new creative apprenticeships and restarting film and TV.
- The Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme are replaced by a Recovery Loan Scheme offering loans of £25,000 to £10m until the end of the year, with an 80% Government guarantee.
- The 100% business rate holiday will end in June, with the next nine months being discounted by two-thirds (up to £2m for closed businesses; less for open).
- The 5% VAT cut for hospitality and tourism will be extended until 30/09/2021, with an interim rate of 12.5% in place until April 2022.
- The nil rate stamp duty band of £500,000 will now end on 30/06/2021, with an interim £250,000 band until 01/10/2021.
- A new Government-backed Mortgage Guarantee will underwrite mortgages of 95% on properties up to £600,000.
To fix the public finances:
- Income tax, National insurance and VAT rates won’t increase.
- Personal tax thresholds will be frozen. The increases promised next year will happen but will then be maintained until April 2026.
- The current inheritance tax thresholds, pensions lifetime allowance, annual exempt amount for CGT will be maintained for the same period.
- The VAT registration threshold is maintained for two years.
- £100m will set up a HMRC task force for fraud in Covid schemes, with further measures on tax avoidance and evasion.
- In April 2023 the rate of corporation tax paid on company profits will increase to 25%. Those with profits of under £50,000 will benefit from a small profits rate at the current rate, 19%, and above this there will be a taper so only those with profits of over £250,000 will pay the full rate.
- The tax treatment of losses will be more generous for the next two years and businesses can carry back losses of up to £2m for 3 years.
- The current 8% bank surcharge will be reviewed as it would make the tax rates for banks too high.
- For the next two years, companies can reduce their tax bill when investing via a ‘super deduction’ of 130% of the cost.
- All alcohol duties and fuel duty will be frozen, with increases cancelled
See what our Executive Director, Ruth Duston OBE, OC, had to say about the budget annoucement here.