Budget March 3rd 2021
We’re using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people.Chancellor of the Exchequer, Rishi Sunak
On Wednesday the Chancellor of the Exchequer, Rishi Sunak, announced his 2021 budget in the House of Commons. The UK GDP fell by 9.9% in 2020 as a result of the global pandemic and subsequent lockdowns leaving the Chancellor to deliver a measured budget that not only continued to support individuals and businesses that needed it but also aimed to begin chipping away at the level of Government borrowing from last year - a Peacetime record. With over 700,000 people having lost their jobs so far in this crisis he laid out a plan to begin our journey as a country to recovery.
With the Office for Budget Responsibility (OBR) now forecasting a 'swifter and more sustained recovery" for our economy it is the Chancellors job to ensure the country stays on track for this recovery.
Below are some key take away points:
Having started his role as the Chancellor just a month before the Coronavirus crisis hit the shores of the United Kingdom Rishi Sunak once again put protecting livelihoods at the top of his agenda announcing the following measures to see the nation through until the end of the pandemic:
- The furlough scheme has been extended until the end of September 2021 to support workers as their industry recovers. However much like the last time the scheme wound down employers will be expected to contribute to their employees salary - 10% from July and 20% from August. Furloughed employees will continue to be paid 80% of their salary whilst on the scheme.
- A £300m culture recovery fund.
- The business rates relief will be extended at a 100% discount for April-June of the 2021-2022 tax year then it will remain at an up to 2/3 discount for the rest of the tax year. The discount is capped at £2 million per business or for properties that were required to close on the 5th of January 2021 or £105,000 per business for other eligible properties.
On Trade Specific:
- The reduced rate for VAT on hospitality businesses at 5% will remain in place until 30th September 2021 and then move to 12.5% before returning to the standard 20% rate April 2022.
- Corporation tax to rise from 19% to 25% in 2023. The Chancellor is creating the 'Small Profits Rates' however in order to aid smaller businesses and make sure the rise in tax only applies to companies who can afford it. Companies with profits of less than £50,000 will still pay the 19% rate and there will be staggered tiers up from this based on profit amounts.
- Alcohol duty will be frozen.
- Fuel duty frozen.
- A restart grant in England has been introduced for non essential retail and hospitality businesses. An £18,000 grant applies for those with a rateable value of over £51k, £12,000 for businesses with a rateable value between £15k - £51k and a grant of £8,000 for those with less than a £15,000 rateable value. These will be available via your local authority.
- The trading loss carry-back rule will be temporarily extended from the existing one year to three years. This means that unincorporated businesses and companies that are not members of a corporate group can obtain relief for up to £2 millions worth of losses in each of 2020-21 and 2021 - 22. There will be limitations on companies who are part of a corporate group, further details of this extension will be published soon.
- A new UK-wide management programme will be made available to small and medium businesses, subsidised by the government up to 90% in order to upskill workers.
- The limit on contactless payments will be raised from £45 to £100 later this year once operators have made their system changes.
- The universal credit uplift of £20 per week will continue for a further six months in the form of a one-off £500 payment.
- Incentive payments for firms hiring apprentices will be doubled to £3,000.
- Stamp duty holiday has been extended until 30th June with a tapering down until the 1st of October.
- Personal tax thresholds will be frozen. The basic allowance will raise to £12,570 and the higher rate threshold will increase to £50,270 as previously planned but then these will be frozen until 2026.
- "Super-Deduction" tax break was announced. It will allow firms to reduce their tax bill by 130% of what they spend on investment. This means that for every £1 a company invests in new equipment they will be able to cut their tax bill by 25p.
- Eight locations for free ports were announced: East Midlands Airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teeside and Solent.
- The Zoo Animals Fund has been extended for a further three months until 30th June 2021.