Chancellor Rishi Sunak revealed the Budget 2021 on March 3rd, in which he announced the Government’s tax and spending plans for the year 2021-2022. It recognises that the impact of COVID, especially on small businesses, will still be felt, with the government’s plan to continue supporting businesses and individuals affected by the global pandemic. He also communicated a series of tax plans which will see future tax rises but hopefully rebalance the public finances. The below listed UK budget summary 2021 highlights key points of the budget. 

According to the Chancellor the UK economy is set to recover quicker than was previously expected. It is estimated that it will return to its original state by the middle of next year, which is six months earlier than previously projected. Yet, the economy is set to be 3% smaller in the next five years, that it would have been if the global pandemic had not affected it. The GDP is said to grow by 4% this year followed by a rise of 7.3% in the next year. 

The government will continue to support furlough and self-employment income support schemes, which have been extended until the end of September 2021. About 60,000 self-employed people will be able to access the grant. 

 

Furloughed employees will continue to receive 80% of their salaries, but from end of July, businesses will be asked to contribute 10% towards their wages. In August and September, they will contribute 20% towards employee salaries, as the scheme will thereafter be slowly phased out. 

 

The treasury has also confirmed extra funding for apprenticeships with a cash incentive to take on apprentices, boosted by £1,000 to £3,000 per hire. The £20 boost to weekly Universal Credit payments has been extended for a further six months. 

 

The government has also unveiled the increase in the minimum wage to £8.91 an hour, applicable from April. 

The government announced a tax relief system to spur business investment, ‘super deduction’. The relief, which will cut taxes by 25% for every pound invested, over a two-year period, is expected to be worth £25bn to UK businesses. 

 

However, the government announced a tax hike for large businesses in 2023 and a ‘stealth tax’ on workers, to shore up the public finances. Corporation tax will increase to 25% in April 2023, with UK still having the lowest rate in the G7, according to Mr. Sunak. Only 10% of companies will pay the full higher rate as small companies with profits under £50,000 will still enjoy the lower rax rate. 

 

The Chancellor further announced that higher income tax thresholds will be frozen at £50,270 from April 2021 after next year’s planned increases till April 2026. Inheritance tax thresholds and the pensions lifetime allowance will also be frozen for five years. 

 

Increases to alcohol duties and fuel duty were scrapped. People claiming Working Tax Credit will get a £500 one-off payment. 

 

The 5% VAT cut for the hospitality, accommodation and attractions sectors will be extended until the end of September, after which the rate will be 12.5% for a further six months. 

Business rates relief for the hardest hit sectors, such as retail, hospitality and leisure, has been extended for the three months in full. Business rates will be discounted by two-thirds a £6bn tax cut for firms, for the remaining nine months of the year. Businesses will be able to carry back trading losses temporarily for three years. 

 

Shops and business that were forced to close because of the pandemic, will have access to £5bn as restart grants. The hospitality, leisure, accommodation, gym and personal care businesses will further receive a one-off cash grant. 

 

Contactless payment limit will rise to £100. 

 

A new visa scheme will be introduced to recruit highly skilled migrants to help start-ups and rapidly growing tech firms. However, there were no real announcements regarding science funding. 

The government has created an emergency response fund to help the NHS pay for treating coronavirus patients and for maintaining staffing levels. Initially set at £5 billion, the size of the fund will be reviewed as the impact of the pandemic develops. An extra £6 billion health funding was announced for the duration of the current parliament. 

 

There is a somewhat modest investment in education and skills with a boost for traineeships and apprenticeships. The government has pledged £3,000 per new hire, a significant encouragement for employers to open employment opportunities for more young people. There is a further commitment to the level 3 Lifetime Skills Guarantee, which supports people of any age to secure qualifications if they do not have a level 3 qualification. 

The Culture Recovery Fund for the arts and culture sector will receive an extra £300 million to the existing £1.57 billion. Museums and cultural bodies in England will receive £90 million to keep going until they can reopen. Community cultural projects will receive £18.8 million. 

 

Sports including cricket, tennis and horse racing will benefit from a £300 million recovery package, to help clubs get back on their feet till spectators can return once lockdown ends. 

Infrastructure projects will be offered billions of pounds as a funding boost including an initial £12 billion of capital and £10 billion of government guarantees for the UK Infrastructure Bank. A range of products, including equity, loans and guarantees will help private businesses fund major infrastructure projects especially in areas such as renewable energy, carbon capture and storage and transportation. 

 

The Chancellor has extended the temporary stamp duty holiday beyond its original March 31st deadline and continue till June 30th in its current form. It offers 0% stamp duty on the first £500,000 of property purchases. The threshold will then be reduced to £250,000 for the three months from 1 July to 30 September, and rates will return to normal from October. He further confirmed plans for the government to guarantee 95% loan-to-value mortgages, which could help first-time buyers get on the property ladder. Mr. Sunak announced the sites for the eight freeports in England, East Midlands Airport, Felixstowe and Harwich, the Humber region, the Liverpool City Region, Plymouth, Solent, Thames and Teesside are all set to benefit from the post-Brexit status.