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.
Health and Education
Alcohol, Tobacco and Fuel