The Chancellor, Rishi Sunak has delivered his Spring budget today 3rd March 2021. The economy is forecast to rebound with 4% projected annual growth this year and a return to pre-Covid levels by mid-2022, with 7.3% growth. Unemployment is expected to peak at 6.5% next year, lower than 11.9% previously predicted.
A summary of the main points affecting business:
- Furlough (job retention scheme) to be extended until the end of September. Government to continue to pay 80% of employees wages for hours they cannot work. Employers to contribute 10% in July and 20% in August and September.
- Self Employed Income Support Scheme (SEISS) also to be extended until September. 600,000 previously excluded self-employed will now be eligible subject to already having filed a tax return for 2019/20.
- Universal Credit (UC). £20 uplift in UC worth £1,000 a year to be extended for another 6 months
- Working Tax Credit claimants to get £500 one-off payment
- Minimum wage to increase to £8.91 an hour from April
- No changes to rates of income tax, NI, VAT, IHT, lifetime pension or CGT allowances.
- VAT rate for hospitality firms to be maintained at reduced 5% rate until September. Interim rate of 12.5% to apply for the following 6 mos. 20% to resume in April 2022.
- Restart grants of up to £6k per premises for non-essential retail due to re-open in April and up to £18k for gyms, personal care providers, hospitality and leisure businesses.
- £150m for community groups to take over pubs at risk of closure.
- Contactless payment limit to rise to £100.
- Personal income tax allowances to be frozen at £12,570 from April 2022 to 2026.
- Higher rate threshold to be frozen at £50,270 from 2022 to 2026. These measures have been announced as a delayed response to paying the Covid bill.
- Corporation tax on company profits to rise from 19% to 25% in April 2023. The Government state that this rate is still the lowest in the G7.
- Rate to remain at 19% for c 1.5 million smaller companies with profits of less than £50k.
- Stamp duty holiday on house purchases in England and N Ireland extended to June with no tax liability on sales of under £500k. Then £250k limit until end September, £125k wef 1 October.
- Tax breaks for firms to “unlock” £20bn worth of business investment.
- Firms will be able to deduct investment costs (new machinery etc) from tax bills, reducing taxable profits by 130%.
- Incentive grants for apprenticeships to rise to £3k
- New recovery loan scheme allowing businesses of any size to apply for loans from £25k -£10m. To be backed by 80% HMG guarantee.