Harvey

PROTECTING THE JOBS AND LIVELIHOODS OF THE BRITISH PEOPLE

Chancellor Rishi Sunak set out the government’s tax and spending plans today as the nation continues to deal with the effects of COVID-19.

The Government has borrowed a record £355bn so far fighting the pandemic and has to come up with a way of paying it back. Sunak also needs to continue supporting the millions still out of work or on furlough due to the downturn.

To view the Budget in full with its supporting documents click here:

https://www.gov.uk/government/publications/budget-2021-documents

Alternatively, I can summarise as follows:

Finance & Taxation

  • Pension Lifetime Allowance to be frozen
  • Pensions to have access to ‘green investments’– FCA consultation to follow shortly
  • No changes to rates of income tax, national insurance or VAT
  • Personal income tax allowance to be frozen at £12,570 from 2022 – 2026
  • Higher rate income tax threshold to be frozen at £50,270 from 2022 – 2026
  • Stamp duty freeze extended for a further three months in England and Northern Ireland
  • After this date, the starting rate of stamp duty will be £250,000 until the end of September
  • Stamp duty will then return to the usual level of £125,000
  • Corporation tax on company profits to rise from 19% to 25% in April 2023, with a taper
  • Rate to be kept at 19% for about 1.5 million smaller companies

COVID-19 Support

  • Existing furlough to be extended until the end of September 2021
  • 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
  • Self-employed grants (SEISS) to be extended to tiers four and five
  • The fourth grant covers the three-month period from the start of February until the end of April. As with previous SEISS grants, it is worth up to 80% of trading profits, averaged over three months, up to £7,500 in total
  • The fifth grant covers early May to late July, but the amount available depends on loss of income
  • Workers whose turnover has fallen by at least 30% can still apply for a grant for up to 80% of profits, up to a value of £7,500 in total
  • Those whose income has fallen by less than that can apply for up to 30% of trading profits, again averaged over three months
  • Claims can be made from next month for the fourth grant. Claims for the fifth grant will open in July
  • 600,000 more newly self-employed people will be eligible for help as access to grants is widened
  • £20 uplift in Universal Credit to be extended for another six months
  • National living wage to increase to £8.91 an hour from April 2021

State of the economy and public finances

  • UK economy forecast to return to pre-Covid levels by middle of 2022
  • Annual growth set to rebound by 4% this year, followed by 7.3% growth in 2022
  • 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
  • Debt as a share of GDP to fall from 4.5% next year to 3.5% in 2022-23

Health and education

  • £19m for domestic violence programmes, funding network of respite rooms
  • £40m of funding for Thalidomide victims and lifetime support guarantee
    Business, digital and science
  • Incentive grants for apprenticeships to rise to £3,000 and £126 for traineeships
  • VAT cut for hospitality firms to be maintained at 5% until September
  • Interim 12.5% rate to apply for the following six months
  • Business rates holiday for firms in England will continue from April until June
  • £5bn in re-opening grants for non-essential businesses of up to £6,000 per premises.

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

Miscellaneous

  • Fuel duty – frozen
  • Air passenger duty (APD) – frozen until 2022 when it will be increased in line with RPI
  • Vehicle Excise Duty (VED) –increased in line with RPI from 1 April 2021
  • Alcohol duty – To further support the hospitality industry and its suppliers, the duty rates on beer, cider, wine and spirits will be frozen for another year.

Freeports

In addition to the above the Budget confirmed the eight new freeports; East Midlands Airport, Felixstowe and Harwich, Humber Region, Liverpool City Region, Plymouth, Solent, Thames, and Teeside.

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