Budget 2021: Sunak sets out plan to rebuild UK economy03/03/2021
Chancellor of the Exchequer Rishi Sunak opened his budget address today by acknowledging the impact the coronavirus pandemic has had on the country, saying it has “fundamentally altered” people’s lives. Noting that 700,000 people had lost their jobs as a direct result, he said that the government will do “whatever it takes” to help.
That “whatever it takes” was on full display in the rest of Mr Sunak’s speech. Today’s announcement amounts to an additional £65 billion, to be delivered in a number of ways. At JW Hinks, we are eager to see our clients make the most of the support that is available to them, so we have detailed the most relevant sections below:
CJRS and SEISS extended until September
Mr Sunak praised the government’s Coronavirus Job Retention Scheme (CJRS), or furlough scheme, as one of the most generous in the world, and announced a widely expected extension of the scheme until September.
The furlough scheme pays 80% of employees’ wages for hours they cannot work as a result of the coronavirus, and will continue with unchanged terms for workers.
However, as businesses begin to reopen, the government will expect them to start contributing to payments made under the scheme. From July, employers will pay 10% towards hours their staff do not work, increasing to 20% in August and September.
Mr Sunak said “There is now a light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help businesses and individuals through the challenging months ahead – and beyond.”
The Chancellor also said that support for the self-employed (the Self-Employment Income Support Scheme – SEISS) will continue until September. As the economy reopens for summer, the government will prioritise people whose turnover has fallen by 30% or more. Mr Sunak noted that this means the government will have spent £33 billion supporting the self-employed.
In further efforts to stimulate the economy through payments directly to people, the Chancellor also announced that the universal credit uplift of £20 a week will continue until September, and the National Living Wage will rise as planned in April.
Chancellor pledges support for businesses
The Chancellor announced some generous support measures for business in today’s budget. First amongst them is a new Restart Grant in April, which Mr Sunak described as a way “to help businesses reopen and get going again.”
Non-essential retail businesses will be eligible for grants of up to £6,000 per premises, while hospitality and leisure businesses will receive grants of up to £18,000.
The Chancellor summarised: “That’s £5 billion of new grants, on top of the £20 billion we’ve already provided, taking our total direct cash support to business to £25 billion.”
In addition to grants, Mr Sunak also announced that the business rates holiday would be extended to the end of June. He said: “For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.”
The Chancellor added that the 5% reduced rate of VAT would be extended for six months until 30th September, followed by an interim rate of 12.5% which will last until the end of March. This, he said, adds up to a total VAT cut of £5 billion.
Tax updates and other measures
For income tax, Mr Sunak said that the threshold for paying the basic rate will increase to £12,750 from next year. For higher-rate payers, that threshold will become £50,270. Both rates will remain unchanged until 2026. The VAT registration threshold will also remain unchanged (£85,000) until 2024.
Corporation tax will rise to 25% in 2023. However, some small businesses will be exempt from this increase. Only businesses that report profits of more-than £250,000 will be taxed at the 25% rate – those with profits of £50,000 or below will be taxed at a 19% rate.
The Chancellor added that corporation tax increases might not be popular, but they were “honest” and “responsible”. He noted that the Small Profits Rate ensured “only 10% of all companies will pay the full higher rate” and said that the UK will still have the lowest corporation tax in the G7.
In an effort to spur innovation, Mr Sunak also announced that a “super-deduction” and 50% first-year allowances will be applied to businesses that invest in qualifying new plant and machinery. Investments in main-rate assets will be relieved by a 130% super-deduction, while investments in assets that qualify for special rate relief will benefit from a 50% first-year allowance.
Mr Sunak announced the extension of the temporary increase in Stamp Duty Land Tax nil rate band for residential property in England and Northern Ireland until 30th June 2021. At that point, the nil band will drop from £500,000 to £250,00, where it will remain until 1 October 2021. It then returns to its normal rate of £125,000.
Other policies set out in the budget include: the creation of eight new freeports; a £150 million fund to help communities take ownership of pubs, theatres, sports clubs and shops; a freeze on alcohol and fuel duties; a “help to grow” scheme aimed at training people in management skills and businesses in digital skills; and a doubling of the payments incentivising businesses to hire new apprentices between April 1st and September 31st 2021, to £3,000.
It is vital that business owners make the most of all the support to which they are entitled, as this could be the distinguishing factor between businesses that thrive, survive, or fail, in the coming year.
We have also created a free guide that give you full details the budget report, to download click here.
If you have any questions relating to how your business will be effected by todays announcements, please contact JW Hinks on 0121 456 0190. Our friendly and professional team of experts can help you to ensure that you have done everything possible to nurture and future proof your business, as well as your personal assets.