Chancellor Rishi Sunak made his Budget 2021 speech on 3 March 2021, the highlights of the speech as as follows:
Highlights
- Corporation tax will increase to 25% from 2023, very small companies are unaffected.
- The Stamp Duty Land Tax (SDLT) nil rate break extends until September.
- Large grants for hospitality industry which also benefits from extended VAT rate reduction.
- Tax allowances are frozen until 2026.
- VAT theshold frozen until 2024
- Business Rates: three months 100% holiday, nine months 66% relief with cap
- Various coronavirus support measures including new grants.
Much has changed due to the coronavirus: there has been £208 billion of government support during the crisis, £350 billion of support is now being announced, total fiscal support will be £407 billion.
The UK's economy shrunk by 10%, the highest borrowing since wartime (WW2) totalling £355 billion.
The chancellor proposes a three-part plan:
- The government will continue to support the economy through Coronavirus.
- Once on the road to recovery, the public finances will need fixing
- Using lower interest rates to invest in capital projects
The Office of Budget Responsibility (OBR) expects the economy to recover by mid-2022. However, in five years time, the economy will still be 5% smaller than otherwise.
The question is how to balance support with fixing public finances.
To protect jobs during coronavirus
- Coronavirus Job Retention Scheme CJRS the 'furlough scheme' extends to 30 Septemeber 2021
- From July onward employers will be asked to contribute more to the scheme on a sliding scale.
- Self-Employed Income Support Scheme (SEISS).
- A fourth and fifth grant will be paid this summer.
- Provided a tax return was filed by 28 Feb, the newly self-employed will be able to claim the fourth and fifth grants.
- Universal credits and working tax credit support will continue with a one-off WTC payment of £500.
- NMW increases to £8.91 from April 2021.
- Increase to £3,000 the employer payment received for new apprentices.
Other support
- Extra £19m for domestic abuse programmes.
- £10m to support war veterans' mental health issues.
- Further £40m support for Thalidomide victims and a lifetime support package.
New business re-start grants
- Up to £6k for retail and non-essential business
- Hospitality business will receive grants of up to £25k
-
£700m for organisations such as sports and arts.
- £500m for film production.
A new recovery loan scheme
- £25k-£10m, with 80% backed by government guarantee
Business rates
- A business rate holiday followed by discounted rates
This year 100% business rates holiday to the end of June. The remaining nine months will be discounted by two-thirds. There is a lower cap for those businesses that have stayed open.
VAT Hospitality and Tourism
- 5% reduced rate of VAT extended to 30 September 2021, followed by a 12.5% interim rate until April 2021.
Stamp Duty Land Tax
- The £500k nil rate band will extend to 30 June 2021
- A £250k nil rate band until 30 September 2021
Homebuyers:
- 95% mortgages with a government mortgage guarantee.
Income Tax
Tax personal allowance will increase next year (6/04/21):
- Lower rate increases to £12,570.
- Higher rates to £50,270.
The rates will be frozen until 2026 and no longer increase with inflation.
From 2026:
Other allowances are also frozen:
- IHT exempt amount unchanged at £325,000
- Pensions allowances unchanged £40,000 p.a and no change to the lifetime limit.
- CGT exempt amount.
- VAT registration threshold remains at £85,000 until 2021.
Corporation Tax
- From 1 April 2023 Corporation tax will increase to 25%
- A small company profit rate (19%) for companies with profits of <£50,000
- Full higher rate for larger more profitable companies with profits of >£250,000
- Favourable treatment for UK banks
Losses
- Changes to current year loss rules: to be carried back three years
New Super deduction for companies
- 130% reduction for expenditure on innovation
Duties
- Alcohol duties frozen
- Fuel duty frozen
Funding and investment models
- A new UK infrastructure bank will be capitalised at £12b initially this Spring
- A new sovereign retail savings product.
- Off-shore wind – funding new port infrastructure Teeside and Humberside.
- A new future fund breakthrough to attract companies to list
- Changes to allow more flexible pension investments
Help to grow
- A new initiative for small businesses. A UK-wide system, Help to Grow, of business education with up to 90% of the cost to be paid by government.
-
Help to Grow Digital: offering free expert IT training and a 50% discount on business software up to £5,000.
Science and innovation
- More cash for vaccine rollout.
- Two new consultations on Research & Development and EIS.
- Visa reforms to attract highly qualified visa applicants.
Increased funding for devolved administrations
- £1.2bn for the Scottish government.
- £740m for the Welsh government.
- £410m for the Northern Ireland executive.
A levelling up fund
Freeports
- Key features: simpler planning, cheaper customs and tax breaks
- Eight new locations in English regions including East Midlands Airport, Felixstow and Harwich, Plymouth, Thames and Teeside.
Useful guides on this topic
Budget 2021: At a glance
A summary key budget announcements together with items published without announcement.
Budget 2021: Subscriber guide
A detailed guide with links to more detail on all the key topics for SMEs and their owners.
