The Budget: How will the new announcements affect you?
The Chancellor, Rishi Sunak has announced his budget and a three part plan, aimed at protecting jobs and tackling the £2.1 trillion national debt brought about by government spending over the last year.
A swifter and more sustained recovery is expected, with a return to pre Covid levels by the middle of next year, with the OBR expecting the economy to grow by 4% in 2021.
In this article, we outline the Chancellor’s plans - key points are summarised below and we will have a video presentation and PDF document sent to you in the next 24 hours with a more detailed explanation of the announcements.
The Chancellor split his budget into three parts; supporting the economy, fixing public finances and building the future economy.
- Tax rates – the rate of corporation tax to increase to 25% in April 2023 for larger businesses. Small businesses will stay at 19%
- The furlough scheme is extended to September 2021 with employees continuing to receive 80% of their salary for hours not worked. No employer contributions beyond NICs and pensions for May and June. From July employers will be asked to contribute 10% and August to September 20%.
- A doubling of apprentice payments to £3,000 for all new hires of any age, with a new flexibility programme that will allow people to work for a number of different employers in the same sector.
- Restart grants to help business reopen – non essential retail will open first and will receive grants of up to £6,000. Personal care and gyms, hospitality and leisure businesses under more restrictions will be able to claim grants up to £18,000. There will also be further English local authority funding.
- New recovery loans scheme - businesses of any size will be able to apply for loans from £25,000 to £10m, the government will continue to provide lenders with an 80% guarantee.
- 100% business rates holiday to continue to the end of June for eligible businesses with up to 66% relief for the rest of the year
- Extension of the temporary reduced rate of VAT for hospitality and tourism businesses
- New super deduction incentive for business investment. The Chancellor says it will allow firms to reduce their tax bill by 130% of what they spend on investment.
- New help to grow scheme to help businesses with management and digital skills. Business schools will be able to offer MBA style training of 50 hours tuition, with businesses paying a maximum of £750 or 10% of the total cost. Small businesses will be eligible for free digital advice and a 50% contribution towards ‘productivity enhancing software.’
- Visa changes to fast track talent and encourage highly skilled workers to work in UK businesses. The UK’s Global Entrepreneur Programme will be expanded.
- The introduction of Free Ports - eight locations for free ports have been announced today. They are East Midlands airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent
- No income tax, National Insurance or VAT increases
- Personal tax allowance to be frozen until 2026 although the personal allowance will continue to go up to £12,570 as planned. It will then stay at that level until 2026
- The higher rate threshold will also go up to £50,270 but then will be frozen for the same period
- The rate of corporation tax to increase to 25% for larger businesses with a taper calculation
Self employed announcement
- SEISS extended to September 2021 with the 4th grant covering 80% of profits for February to April 2021 and the 5th will target support towards those most affected from July based on profits. If your profit has decreased by over 30% or more you will be entitled to the full grant, any decrease of less than 30% will result in a smaller grant
- £20 weekly increase in Universal Credit payments will be extended for six months. Working Tax Credit claimants will also get the boost but in the form of a £500 one-off payment.
Housing sector announcements
- Stamp duty cut extended by three months
- £500,000 nil rate band until 30 June
- £250 000 nil rate until end of September
- Usual rate of £125,000 from 1 October
- Government mortgage guarantee – the government will offer lenders a guarantee for borrowers needing 95% mortgages.
- Alcohol duty increases are cancelled
- Fuel duty increase cancelled
- Additional £19 million funding increase to domestic violence programmes
- A further £10 million funding for veterans’ mental health initiatives
- Extending funding for those affected by Thalidomide by £40 million and a lifetime commitment guaranteeing funding forever
- £300 million announcement to extend the Culture Recovery Fund
- Additional £2.4 billion in funding for devolved administration in Scotland, Wales & Northern Ireland.
- A new £150 million fund to help communities take ownership of pubs, theatres or sports club
Taxpayer protection taskforce
- A new £100 million team will be created to investigate and prosecute individuals and companies which have fraudulently claimed under government Covid schemes
We will have a video presentation and PDF download document sent to you in the next 24 hours with a more detailed explanation of the announcements. If you have any questions please get in touch with your Swindells partner who will be able to advise you further.
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