What was announced in Chancellor Rishi Sunak’s speech?
The Chancellor of the Exchequer, Rishi Sunak, says he would do ‘whatever it takes’ during the pandemic, and that he has done and will continue to do so. ‘It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation,’ he told Parliament.
Mr Sunak said he wants to be honest about the government’s plans for fixing the public finances, and set out plans for the future. These are the key Budget 2021 takeaways announced from his Budget 2021 speech on 3 March.
Economy
- UK economy contracts by 10% in 2020
- Chancellor forecasts a ‘swifter and more sustained’ recovery
- 700,000 people have lost their jobs since the coronavirus (COVID1- 9) pandemic began
- Unemployment expected to peak at 6.5% next year, lower than 11.9%previouslypredicted
Growth
- Economy set to rebound in 2021, with projected annual growth of 4% this year
- Economy forecast to return to pre-COVID levels by middle of 2022, with growth of 7.3% next year
Borrowing
- UK to borrow a peacetime record of £355 billion this year
- Borrowing to total £234 billion in 2021/22
- Debt levels set to peak at 97.1% of GDP in 2023/24
Personal taxation , investments and pensions
- No changes to rates of Income Tax and National Insurance (CPI rise from April 2021)
- Personal Income Tax allowance to be frozen at £12,570 from April 2022 to 2026
- Higher Rate Income Tax threshold to be frozen at £50,270 from 2022 to 2026
- No changes to Inheritance Tax or Lifetime Pension Allowance or Capital Gains Tax allowances until April 2026
- Adult Individual Savings Account (ISA) annual subscription limit for 2021/22 remains unchanged at £20,000
- Annual subscription limit for Junior Individual Savings Accounts UISAs) and Child Trust Funds for 2021/22 remains unchanged at £9,000
- The government has maintained the Lifetime Allowance at its current level of£1,073,100 until April 2026
Coronavirus (COVID-19)
- Extension to Coronavirus Job Retention Scheme (CJRS) u ntil the end of September
- 80% of employees’ wages to continue to be paid by the government for hours they cannot work
- Employers will be asked to contribute 10% in Jul y, 20% in August and 20% in September, as the economy reopens
- Support for the self-employed extended until September
- 600,000 more self-employed people will be eligible for help as access to grants is widened
- Working Tax Credit claimants will get £500 one-off payment
- Minimum wage to increase to £8.91 an hour from April
- £20 increase in Universal Credit worth £1,000 a year to be extended for another six months
Housing
- Stamp Duty Land Tax (SDLT) holiday on property purchases in England and Northern Ireland extended to June, with no tax liability on sales costing less than £500,000
Transport, environment and infrastructure
- Leeds will be the location for a new UK Infrastructure Bank
- The new UK Infrastructure Bank will have £12 billion in capital, with the aim of funding £40 billion worth of public and private projects
- £15 billion in green bonds, including for retail investors, to help finance the transition to net zero by 2050
Health
- £19 million announced for domestic violence programmes, funding a network of respite rooms for homeless women
- £40 million of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee
- £10 million to support armed forces veterans with mental health needs
- £1.65 billion to support the UK’s COVID vaccination rollout
Nations and regions
- First eight sites for Freeports in England announced
- £1.2 billion in funding for the Scottish government, £740m for the Welsh government and £41Om for the Northern Ireland executive
Other announcements
- Duties on all alcohol frozen for a second year
- No extra duties on spirits, wine, cider or beer
- Eleventh consecutive year fuel duty to be frozen
- £100 million to set up an HMRC taskforce with 1,000 investigators to tackle fraud in COVID support schemes
Business
- Corporation Tax on company profits set to rise from 19% to 25% in April 2023
- Corporation Tax rate to be kept at 19% for companies with profits of less than £50,000
- Tax breaks for firms to ‘unlock’ £20 billion worth of business investment
- VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022
- VAT rate for hospitality firms to be maintained at reduced 5% rate until September
- Interim 12.5% VAT rate to apply for the following six months
- Firms will be able ‘deduct’ investment costs from tax bills,reducing taxable profits by 130%
- Incentive grants for apprenticeships to rise to £3,000 and £126 million for traineeships
- For firms in England, the business rates holiday to continue until June followed by a 75% discount
- £5 billion in Restart grants for shops and other businesses that closed due to COVID
- £6,000 grant for premises for non essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
- New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
- Contact less payment limit will rise to £100 later this year
- Review of the current 8% bank surcharge to make sure the sector ‘remains internationally competitive’
For a more detailed insight, download our Guide to Budget 2021
