Today, Chancellor Rishi Sunak announced the 2021 Budget, laying out plans on how the country will recover from the economic effects of coronavirus.
Sunak’s plans detailed how a further £65 billion worth of support will be introduced, as well as several other announcements that will affect businesses, the self-employed and working families. Here is a breakdown of everything you need to know.
Further COVID-19 support
The chancellor delivered some key points surrounding support following coronavirus:
- Furlough will be further extended up until September 2021. The Government will continue to pay 80% of employees’ wages for hours that they cannot work. Employers will be asked to contribute 10% in July and 20% in August.
- The self-employed will receive further help as it was announced that the Self-Employment Income Support Scheme will be extended up until September 2021, covering 80% of average trading profits up to £7,500. These schemes will also become more accessible as the access to the grant is widened: if you filed a tax return for the 2019-20 tax year, you will now be eligible to claim for the first time.
- The £20 uplift in Universal Credit will be extended for another six months. A one-off payment of £500 will be available to eligible Working Tax Credit claimants.
Help for businesses
There have been several new plans announced to help businesses:
- From April 2021, businesses will be able to claim a new Restart Grant to help them open following the coronavirus pandemic. These are a one-off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses. Retail businesses could claim up to £6,000.
- A new Recovery Loan Scheme was announced, meaning that businesses of any size could get a loan of between £25,001 and £10 million to help businesses through the next stage of recovery.
- The apprentice hiring incentive has now doubled meaning businesses will now receive a payment of £3,000 if employers hire a new apprentice between 1st April 2021 and 30th September 2021.
- An additional £300 million in support will be provided to the arts to support theatres, museums and other cultural organisations.
- The 100% business rates holiday will continue until June and then will be cut by two-thirds for the remainder of the year.
- A Help to Grow business scheme had been announced to provide free training and discounts on productivity software to help businesses grow – you can apply for the Help to Grow scheme here.
- All small to medium-sized businesses will be able to continue to claim up to two weeks of eligible Statutory Sick Pay costs per employee from the government.
- Businesses will be able to carry back losses of up to £2 million for up to 3 years to support cashflow.
- The VAT cut for the hospitality sector will stay at 5% until 30th September, at which point it will then change to 12.5% for 6 months until April 2022.
- Alcohol and fuel duty had been frozen.
- Corporation Tax will increase to 25% in 2023. Businesses with a trading profit of £50,000 or less will be taxed at 19%. Businesses with profits greater than £250,000 will be taxed at 25%.
- A new super-deduction will be introduced which will cut companies tax bills by 25p for every pound they invest in new equipment.
- The Chancellor announced that 95% mortgages will return meaning first-time buyers have the option to buy a home worth up to £600,000 with a 5% deposit
- The temporary cut in residential Stamp Duty Land Tax (NIL to £500,000) has been extended to 30th June 2021. From 1st July to 30th September 2021, the NIL rate band will be reduced to £250,000 before going back to £125,000 as from 1st October 2021.
National Living Wage & personal tax threshold
- The National Living Wage will increase to £8.91 as of April 2021.
- The personal tax threshold will freeze at £12,500 up until April 2022, after which point it will increase to £12,570 and then freeze again until April 2026.
- The higher rate income tax threshold will be frozen at £50,270 from April 2022 to 2026.
If you need further advice following the proposed changes announced by Rishi Sunak, you can contact our team today and we will be more than happy to answer any queries you may have.