Budget 2021 at-a-glance

Chancellor of the Exchequer Rishi Sunak has today unveiled the contents of his Budget in the House of Commons and his three-point plan to protect jobs and strengthen public finances:

• billions to support businesses and families through the pandemic
• investment-led recovery as UK emerges from lockdown
• future changes to strengthen public finances

Here we have a summary of the main points:

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
• Minimum wage to increase to £8.91 an hour from April

Taxation

• No changes to rates of income tax, national insurance or VAT
• 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
• 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 on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000
• No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances

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 taxable profits by 130%
• Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships
• VAT rate for hospitality firms to be maintained at reduced 5% rate 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 Restart grants for shops and other businesses forced to close
• £6,000 per 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
• 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
• Fuel duty to be frozen for eleventh consecutive year

State of the economy and public finances

• 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 middle of 2022, with growth of 7.3% next year
• 700,000 people have lost their jobs since pandemic began
• Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted
• UK to borrow a peacetime record of £355bn this year.
• Borrowing to total £234bn in 2021-22

We will publish further details about the key points as they become available over the next few days on our website and in our newsletter.