Spring 2021 Budget highlights
THE SUPPORT PACKAGES WE ARE NOW FAMILIAR WITH:
- The Chancellor confirms the extension of the furlough scheme until the end of September.
- Employees will continue to receive 80% of their wages until the scheme ends, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out.
- Sunak also confirms the self-employment income support scheme has also been extended. The fourth grant will cover February to April, worth 80% of average trading profits up to £7,500.
- The £20-a-week increase in universal credit is extended for six months.
THE BOUNCE BACK SCHEME:
- As the government-backed bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS) come to an end, the Treasury is launching a new loan scheme to run until the end of the year. Loans can be between £25,000 and £10m.
- Hospitality and leisure businesses pay no business rates for three months, then rates will be discounted for the remaining nine months of the year by two-thirds, in a £6bn tax cut.
- 5% reduced rate of VAT will be extended until the end of September. Then it will be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022. Sunak says this is a cut worth £5bn.
- The Chancellor announces the stamp duty holiday will be extended. As expected, stamp duty holiday on properties up to £500,000 continues until the end of June. It will be kept at double its standard level until the end of September, and then return to usual levels from 1 October.
- The chancellor confirms a mortgage guarantee to help first-time buyers access 95% mortgages.
TAXES – personal:
- The government will not raise national insurance, income tax or VAT, but will freeze personal tax thresholds – as anticipated.
- The personal allowance will remain at £12,750 until 2026. The higher-rate threshold will increase to £50,270 next year, and also remain at that level.
- The inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption threshold will also be frozen.
TAXES – corporate:
- In April 2023, the rate of corporation tax will increase to 25%. Sunak says this will be the lowest rate in the G7.
- Sunak says businesses will only be impacted if they are making profits, and the change will only come in once the OBR forecasts the economy will be recovering.
- The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.
THE IMPORTANT BITS!
- Alcohol duties will be frozen for the second year in a row.
- Fuel duty will also be frozen.
Hope this has helped clarify some of the points covered in the budget today.
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