Budget 2021: Key points and top takeaways
Sunak’s announcements included extension of the furlough scheme, more help for the self-employed, extra help for businesses, an extension of the stamp duty holiday, a VAT cut for hospitality, and a new mortgage guarantee scheme.
Here are the key points:
Extension of the furlough scheme
The Coronavirus Jobs Retention Scheme will run until the end of September – it was due to end in April.
Employers will be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September, as the economy reopens.
More help for the self-employed
A fourth Self Employment Income Support Scheme (SEISS) grant will be available to cover lost self-employed earnings for February, March and April.
The grant will cover 80% of monthly earnings up to a maximum of £2,500.
For the fifth grant will be available from July.
Eligibility of the SEISS grants has also been widened to include about 600,000 people who became self-employed in the 2019-20 tax year.
More help for businesses
Bounce Back Loans will be replaced with new “recovery loans”. Businesses of any size can apply for loans from £25,000 to £10m.
Businesses such as shops and hospitality reopening from April can enjoy grants worth up to £18,000 per firm.
The business rates holiday will be extended until the end of June. For the remaining nine months of the tax year, business rates will be discounted by up to two-thirds.
A £520m Help to Grow scheme will aid companies’ growth after the pandemic.
National Living Wage
The National Living Wage will go up from £8.91 an hour from 1 April.
For the first time, the government’s highest rate will also include those aged 23 and over – workers who previously fell under the lower wage bracket.
This means 23 and 24-year-olds who are currently on £8.20 an hour will see their pay jump by 71p to £8.91 from April.
The personal allowance will increase to £12,570 from its current level of £12,500 in April, as planned. But it will then not be increased again before April 2026.
The threshold for paying the higher rate of income tax is increasing to £50,270 in April from its current level of £50,000. However, this threshold will then be frozen until 2026.
Alcohol and fuel duties
Alcohol duty will remain frozen for the second year in a row.
Fuel duty will remain frozen for the 11th consecutive year.
Extension of the stamp duty holiday
The government has extended the current stamp duty holiday until 30 June.
From July the nil rate threshold drops from £500,000 to £250,000 until October.
New mortgage guarantee scheme
A new mortgage guarantee scheme will enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit.
From April 2023 the rate of Corporation Tax paid on company profits will increase from 19% to 25%.
Companies with profits under £50,000 will remain at 19%. Sunak says this means only 10% of companies will pay the higher rate.
Inheritance tax (IHT) thresholds will be maintained at their current levels until April 2026.
The threshold currently stands at £325,000 for individuals, doubling to £650,000 for couples.
Universal Credit £20 uplift extended
When the coronavirus pandemic first hit, the government increased Universal Credit payments by £20 each week. But this uplift was due to end in April.
It has now been extended for another six months.
Pension lifetime allowance frozen
The pension lifetime allowance will stay at its current level of £1,073,100 until April 2026.
Extension of the VAT cut for hospitality and tourism
The VAT cut to 5% for hospitality, accommodation and attractions across the UK will be extended until the end of September.
This will be followed by a 12.5% rate for a further six months until 31 March 2022.
New green savings bond
The government is launching a new green savings bond via National Savings and Investments (NS&I).
Interest rates for the account have not yet been announced, but the funds raised will be used to fund projects on renewable energy and ‘clean’ transportation.
In other savings news, the adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.
Contactless payment limit to rise to £100
The limit for contactless payments on debit and credit cards has been more than doubled, going up from £45 to £100.
Arts and culture
An extra £300m will be added to the government’s £1.57bn Culture Recovery Fund.
There will also be an extra £90m for museums and cultural bodies in England, £18.8m for community cultural projects. A further £77m is allocated for similar initiatives in Scotland, Wales and Northern Ireland.
Sport recovery package
Sports including cricket, tennis and horse racing will benefit from a £300m recovery package.
There will also be £25m new funding to support grassroots football.
An extra £1.65bn has been allocated to help the government reach its target of offering a first dose to every adult by 31 July, and for trials to see if different vaccine doses can be mixed.