The chancellor unveiled the contents of his Budget in the Commons this afternoon, announcing a raft of new support measures alongside plans to shore up Britain’s finances in the wake of the coronavirus pandemic.
Rishi Sunak doubled down on his commitment to do “whatever it takes” to protect lives and livelihoods as he set out extensions to the furlough scheme, business rates relief, the £20 uplift to weekly Universal Credit payments and the stamp duty holiday.
However, Sunak also said he wanted to be “honest” about the government’s plans for nursing public finances back to health, as he announced tough measures including corporation tax hikes and a “stealth tax” on workers.
Here are the key points in the chancellor’s spring Budget 2021:
Taxes, taxes, taxes
- Corporation tax will rise from 19 per cent to 25 per cent in April 2023 for all businesses with profits over £50,000.
- Smaller firms with profits under £50,000 will still be able to enjoy the lower 19 per cent tax rate. In total, only 10 per cent of companies are expected to have to pay the higher tax rate.
- Sunak insisted the UK will still have the lowest rate in the G7.
- The chancellor announced a new “super deduction” tax relief to encourage business investment. The scheme which will cut taxes by 25p for every pound invested.
- The Treasury expects the relief to be worth £25bn to UK businesses over a two-year period.
- Income tax thresholds will be frozen until 2026 after next year’s planned increases.
- The move is expected to cost the UK taxpayer £8.1bn by 2025.
Recovery Loans Scheme
- Sunak unveiled a new loan scheme to support businesses hit by the pandemic, replacing previous emergency government funding.
- The Recovery Loans Scheme will offer loans from £25,000 to £10m up to the end of the year, with the government providing lenders with a 80 per cent guarantee.
Restart Grants Scheme
- The chancellor also unveiled a new £5bn Restart Grants Scheme that will provide Covid-hit firms up to £18,000 to boost their survival chances.
- The cash injection will be aimed at retail, hospitality, accommodation, leisure and personal care firms. Non-essential retailers will be able to access £6,000 per business.
Business Rates Relief
- Business rates relief for the hardest hit sectors, such as retail and hospitality, has been extended for three months until June. For the remaining nine months of the year, business rates will be discounted by two-thirds.
- The VAT cut to five per cent for the hospitality, accommodation and attractions sectors will be extended until the end of September.
- The rate will then be 12.5 per cent for a further six months.
- The furlough scheme will be extended until September.
- The government will continue paying 80 per cent of employees’ wages, up to £2,500 a month until the end of June.
- Employers will then be asked to pay 10 per cent of wages paid out through the scheme in July and 20 per cent in August and September.
Self Employment Support
- The Self Employment Support Scheme (SEISS) will also be extended until September.
- Around 600,000 self-employed people who were unable to claim government grants in previous funding packages will be now be able to do so.