Chancellor Rishi Sunak opened by detailing the pandemic’s economic impact and declared that his focus remains on protecting jobs, supporting businesses, and helping families.
He shared data from the OBR, highlighting that:
- UK economy shrank by 10% in 2020;
- Economy forecast to rebound in 2021, with projected annual growth of 4% this year;
- Economy forecast to return to pre-Covid levels by the middle of 2022, with growth of 7.3% next year;
- 700,000 people have lost their jobs since the pandemic began;
- Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted;
- The UK will borrow £355bn this year, a peacetime record, bringing borrowing to a total £234bn in 2021-22
He remained resolute that this Budget will:
- Support people and business
- Fix public finances (when we are on the road to recovery)
- Begin work on building the economy.
The Government is due to elaborate on the details soon, in the meantime we have summarised the main elements:
- Coronavirus support
- Furlough to be extended until the end of September;
- Government to continue paying 80% of employees’ wages for hours they cannot work;
- Employers to be asked to contribute 10% in July and 20% in August and September;
- Support for the self-employed also to be extended until September;
- 600,000 more self-employed people will be eligible for help as access to grants is widened;
- £20 uplift in Universal Credit worth £1,000 a year to be extended for another six months;
- Working Tax Credit claimants will get £500 one-off payment; and
- Minimum wage to increase to £8.91 an hour from April
- No changes to rates of income tax, national insurance or VAT;
- Personal income tax allowance to be frozen at £12,570 from 2022 to 2026;
- Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026;
- Corporation tax on company profits to rise from 19% to 25% in April 2023;
- Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000;
- Stamp duty holiday extended to June, with no levy on sales of under £500,000;
- No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances.
Health and Education
- £1.65bn to support the UK’s vaccination rollout;
- £19m for domestic violence programmes, funding network of respite rooms for homeless women; and
- £40m of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee.
The Arts and Sport
- £400m to help arts venues in England, including museums and galleries, re-open; and
- £300m recovery package for professional sport and £25m for grassroots football
Business, digital and science
- Tax breaks for firms to “unlock” £20bn worth of business investment;
- Firms will be able “deduct” investment costs from tax bills, reducing costs by 130%;
- Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships;
- VAT rate for hospitality firms to be maintained at 5% until September;
- Interim 12.5% rate to apply for the following six months;
- Business rates holiday for firms in England to continue until June with 75% discount after that;
- £5bn in re-opening grants for non-essential businesses worth up to £6,000 per premises;
- New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas; and
- Contactless payment limit will rise to £100 later this year.
Alcohol, tobacco and fuel
- All alcohol duties to be frozen for second year running;
- No extra duties on spirits, wine, cider or beer; and
- Fuel duty to be frozen for tenth consecutive year.
Environment and energy
- New UK Infrastructure Bank to be set up in Leeds; and
- It will have £12bn in capital, with aim of funding £40bn worth of projects.
Nations and regions
- £1.2bn in funding for the Scottish government, £740m for the Welsh government and £410m for the Northern Ireland executive;
- 750 civil servants to be relocated to new Treasury campus in Darlington;
- £1bn Towns Fund fund to promote regeneration in 45 English towns;
- £150m for community groups to take over pubs at risk of closure; and
- First eight sites for freeports in England announced – this includes Felixstowe and Harwich.
Transport, infrastructure and housing
- Mortgage guarantee scheme to help people with small deposits get on the housing ladder; and
- New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas.
For specific support on how your business needs to get ready for the impact of these announcements, please contact us.