On the 3rd March 2021, Chancellor Rishi Sunak outlined the details of the latest budget, setting out
the plans for the government’s tax and spending for the coming year. This was mainly focused on the
impact of the Covid-19 pandemic and recovery of the UK economy.
UK Economy and Finances
The UK has borrowed a peacetime record of £355bn so far to help combat the impact of Covid-19 and
to support the jobs and livelihood of the British people.
The UK economy shrank by 10% in 2020 but is forecast to rebound in 2021-22 with a 4% predicted
annual growth this year and it is expected to return to pre-covid levels by mid-2022, with 7.3% growth
700,000 people have lost their jobs in the UK since the pandemic began, with many businesses closing
or being unable to trade for long periods of time. Unemployment is expected to peak at 6.5% next
year, which is lower than the 11.9% which was previously predicted.
Income and Benefits
The pandemic has severely impacted employment and the ability to trade for many people. The government has committed to extending the furlough scheme until at least the end of September, bypaying 80% of employee’s wages, for hours they are unable to work, with employers being asked tocontribute 10% in July, and 20% in August and September.
Support for the self-employed has also been extended until September, with access to grants being
widened to include a further 600,000 people.
The uplift in Universal Credit of £20 per week, has been extended for a further 6 months, and Working
Tax Credit claimants will get a one-off payment of £500.
Minimum wage will increase to £8.91 an hour from April.
Taxation and Allowances
Income Tax, National Insurance and VAT will remain unchanged.
The tax-free Personal Allowance threshold will increase from April 2021 but will be frozen at these
levels until 2026.
Corporation Tax on company profits over £250,000 will rise from 19% to 25% in April 2023, with a
tape, and the 19% rate will be kept for approximately 1.5 million smaller companies with profits of
less than £50,000.
Inheritance Tax thresholds, Pension Lifetime Allowances and Capital Gains tax exemptions will be
frozen at the 2020/21 tax levels until 2025/26.
Key Budget Information
The Stamp Duty holiday on house purchases in England and Northern Ireland has been extended until
30th June 2021. After this date the starting rate of stamp duty will be £250,000 until the end of
September 2021 and then return to the previous level of £125,000.
- Tax breaks will be introduced to provide £20bn worth of business investment. Investment costs will
- be able to be deducted from tax bills, reducing taxable profits.
- Incentives for apprenticeships will increase.
- Hospitality firms will have a lower VAT rate of 5% until September, then an interim 12.5% will apply
- for the following 6 months.
- Business rates holiday in England will continue until June with a 75% discount following that.
- A ‘Restart’ grant will be available for shops and other businesses who were forced to close in England;
- £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.
- £400 million will be provided to help art venues in England to reopen, such as museums and galleries.
- Rescue packages will be made available for professional and grassroots sports.
- The first 8 freeports in England have been announced, East Midlands Airport, Felixstowe and Harwich,
- Humber, Liverpool City, Plymouth, Solent, Thames, and Teesside.
- £1bn will promote regeneration in 45 English towns.
- £150m will be provided for community groups to take over pubs at risk of closure.
- The Contactless payment limit will increase to £100 later in the year.
Health and Education
- £1.65bn will be provided to support the UK’s vaccination rollout.
- Mental health support for armed forces veterans (£10m) and domestic abuse programmes (£19m) will
- also benefit from further funding to provide help and support to those who need it.
Alcohol, Tobacco and Fuel
- All alcohol duties will be frozen for a 2nd year.
- Fuel duty to be frozen for an 11th consecutive year.
- No further duties on tobacco following a rise in November 2020.