The Budget 2021
Today Chancellor Rishi Sunak announced the 2021 Budget in the House of Commons. Below we have highlighted the key points of his announcement.
“This budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people,” Rishi Sunak tells the Commons.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
“And, third, in today’s budget we begin the work of building our future economy.”
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- The furlough scheme will be extended until the end of September.
- Support for the self-employed will also be extended until the end of September – with 600,000 more people eligible
- Internships: Businesses will be given incentive payments of £3,000 for all new hires of any ages
- A new restart grant of up to £6,000 per premises in April and up to £18,000 for firms that open up later
- Corporation tax increase to 25% in 2023 (a 6% increase)
- Income tax threshold will rise to £12,570 and £50,270 next year before it will be frozen until April 2026
- Planned increases in duties for spirits, wine, cider and beer will be cancelled, with all alcohol duties frozen for a second year in a row.
- Planned increases in duties for fuel will be cancelled.
- Stamp Duty will be extended until end of June
- New 5% deposit scheme for First time buyers
- Extra £19m for domestic violence programmes
- Working Tax Credit claimants will also be given more support for the next six months, with a one-off payment of £500
- The Universal Credit uplift of £20-a-week will continue for another six months
- New business recovery loan scheme
- 5 Billion fund to help the high street recover
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“For employees, there will be no change to the terms – they will continue to receive 80% of their salary, for hours not worked, until the scheme ends,” Rishi Sunak says.
“As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees.
“Nothing will change until July, when we will ask for a small contribution of just 10% and 20% in August and September.”
Support for the self-employed will also be extended until the end of September – with 600,000 more people eligible
“When the scheme was launched, the newly self-employed couldn’t qualify because they hadn’t all filed a 2019-20 tax return,” Rishi Sunak says.
“But as the tax return deadline has now passed, I can announce today that, provided they filed a tax return by midnight last night, over 600,000 more people, many of whom only became self-employed last year can now claim the fourth and fifth grants.”
For the next two years, when companies invest, they can reduce their tax bill by 130% in a super deduction, Rishi Sunak announces
“Under the existing rules, a construction firm buying £10m of new equipment could reduce their taxable income, in the year they invest, by £2.6m. With the Super Deduction, they can now reduce it by £13 million. We’ve never tried this before in our country,” the chancellor says.
“The OBR have said it will boost business investment by 10%; around £20bn higher per year.
“It makes our tax regime for business investment truly world-leading, lifting us from 30th in the OECD, to 1st. And, worth £25bn during the two-years it is in place.
“This will be the biggest business tax cut in modern British history.”
“We’re going to help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each,” the chancellor says.
Corporation tax increase to 25% in 2023 (a 6% increase)
“This new higher rate won’t take effect until April 2023, well after the point when the OBR expect the economy to have recovered,” the chancellor explains.
“And even then, because corporation tax is only charged on profits, any struggling businesses will, by definition, be unaffected.
“Second, I’m protecting small businesses with profits of £50,000 or less, by creating a Small Profits Rate, maintained at the current rate of 19%.
“This means around 70% of companies – 1.4 million businesses – will be completely unaffected.
“And third, we will introduce a taper above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.”
“So this government is not going to raise the rates of income tax, national insurance, or VAT.”
The chancellor says the income tax threshold will increase next year to £12,570, but it will be kept at this level until 2026.
The higher rate threshold will rise to £50,270 next year, but will also then stay there until 2026.
“Nobody’s take home pay will be less than it is now, as a result of this policy,” Mr Sunak says.
“But I want to be clear with all Members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation.
“We are not hiding it, I am here, explaining it to the House and it is in the Budget document in black and white. It is a tax policy that is progressive and fair.”
The chancellor adds: “I will also maintain, at their current levels, until April 2026: The inheritance tax thresholds, the pensions lifetime allowance, the annual exempt amount in capital gains tax and, for two years from April 2022, the VAT registration threshold.”