Coronavirus – The Budget March 2021
Key Points from Rishi Sunak’s March 2021 Budget
Chancellor Rishi Sunak announced a combination of further measures to support the economy in response to Coronavirus 12.30pm (today) on 3rd March 2021.
Rishi Sunak’s Opening Remarks
- The Chancellor says he would do “whatever it takes” during the pandemic, and that he has done and will continue to do so. He went on to say;
- “There has been acute damage to the economy, shrinking by 10% – the largest fall in 300 years, and borrowing is highest it has been outside of wartime. It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation”
- Sunak confirms the extension of the furlough scheme until the end of September 2021.
- Employees will continue to receive 80% of their wages until the scheme ends, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out.
VAT Rate Cut Extension
- 5% reduced rate of VAT will be extended until the end of September 2021. Then it will be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022.
- Companies with profits of less than £50,000 will remain at 19%.
- In April 2023, the rate of corporation tax for companies with profits over £50,000 will increase to 25%.
- The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate.
- The government is investing £25bn by allowing a 130% super-deduction on tax for investments made by companies. This means firms can cut their taxes by up to 25p for every pound they invest.
- The personal allowance will remain at £12,750 until 2026. The higher-rate threshold will increase to £50,270 next year, and also remain at that level.
- The inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption threshold will also be frozen.
- The government will not raise national insurance, income tax or VAT, but will freeze personal tax thresholds.
Self-Employed Income Support
- Sunak also confirms the self-employment income support scheme has also been extended. The fourth grant will cover February to April, worth 80% of average trading profits up to £7,500.
- A fifth and final grant will be available from May onwards, worth three months of average profits. This will be open to claims from late July.
- 600,000 more self-employed people will be eligible for government help as access to grants is widened; Those who filed their tax return for 2019-20 by midnight last night are now eligible.
- The £20-a-week uplift in universal credit is extended for six months.
Business Support Loans
- As the government-backed bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS) come to an end, the Treasury is launching a new loan scheme to run until the end of the year. Loans can be between £25,000 and £10m.
Business Support Grants
- Hospitality and leisure businesses pay no business rates for three months, then rates will be discounted for the remaining nine months of the year by two-thirds, in a £6bn tax cut.
- As expected, stamp duty holiday on properties up to £500,000 continues until the end of June 2021. It will be kept at double its standard level until the end of September, and then return to usual levels from 1 October 2021.
- The chancellor confirms a mortgage guarantee to help first-time buyers access 95% mortgages.
- Alcohol duties will be frozen for the second year in a row.
- Fuel duty will also be frozen
Source: The Guardian