The Budget Summarised

The budget summarised

Authored by Lisa Hogg

Lisa Hogg

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Approximate read time: 2 minutes

Even with the promising vaccine rollout and a roadmap to exit lockdown, the coronavirus pandemic that stopped the last budget in its tracks is still affecting the nation. So, all eyes were on the House of Commons on March 3rd, 2021, when Chancellor Rishi Sunak delivered his much-anticipated budget.

Coronavirus support

News of the furlough scheme’s extension had already been released; the Coronavirus Job Support Scheme is now set to conclude in September 2021, paying up to 80% of employees’ wages if they cannot work. The Self-Employment Support Scheme has also been extended until September, and the acceptance criteria will be widened so more people will become eligible for the grants.

Employers are expected to increase contributions to the furlough scheme: 10% in July and 20% for the final two months.

Tax and public finances

In a year where 700,000 people lost their jobs, raising unemployment to an expected peak of 6.5%, the economy shrank by 10%, and government borrowing was at £355bn: its highest in peacetime. The government has forecast economic growth of 4% in 2021-2022, predicted to return to pre-pandemic levels by mid-2022.

Several tax allowances and rates will freeze:

  • Income tax, National Insurance and VAT remain unchanged, as does inheritance tax, lifetime pension and capital gains tax allowances.
  • Personal income tax will stay at £12,570 from 2022 until 2026.
  • Higher rate income tax will stay at £50,270 from 2022 until 2026.
  • The stamp duty holiday in England and Northern Ireland will continue until June 2021, and no tax liability on sales lower than £500,000
  • Corporation tax will stay at 19% for companies with profits below £50,000.

However, corporation tax on company profits will increase to 25% from April 2023.

Business

Among the promises for business was £5bn in restart grants for businesses unable to open due to the pandemic. Non-essential business due to reopen in April can claim £6,000, and gyms, care providers, hospitality and leisure businesses can claim up to £18,000. Until September, hospitality firms will have their VAT rates maintained at a reduced 5%. The English business rates holiday will continue until June, with a continued discount of 75% afterwards.

The minimum wage will increase to £8.91 an hour from April 2021, and the limit for contactless transactions will increase from £35 to £100.

Summary

Although the coronavirus vaccine rollout and the roadmap to recovery give hope of returning to everyday life within the next 12 months, many businesses, be they limited companies or sole traders, may still need support over the next few months. The budget announced on March 3rd, 2021, included several measures to continue supporting businesses and individuals through the phased reopening and the pandemic’s immediate aftermath.

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