On 3 March 2021, the Chancellor of the Exchequer, Rishi Sunak, delivered one of the most closely watched Budget updates in a generation. An extension to the Chancellor’s flagship furlough scheme and more coronavirus support dominated.
In his Budget speech, Mr Sunak outlined new measures to help business and jobs through the coronavirus pandemic and to support the UK’s long-term economic recovery, plus some key changes in taxation and minimum wage.
Our key takeaways from The Budget 2021:
Furlough to be extended until the end of September 2021
The government will continue paying 80% of employees’ wages for hours they cannot work. Employers will be asked to contribute 10% in July and 20% in August and September. Some 600,000 more self-employed people will also be eligible for government help as access to grants is widened.
Concerns over furlough? Contact our employment law team here.
Mortgage guarantee scheme introduced
The new mortgage guarantee scheme will increase the availability of 95% Loan-to-value mortgage products, enabling more households to access mortgages without the need for prohibitively large deposits. Find out more about the scheme here.
Stamp duty extended until end of June 2021
The government has announced that the temporary stamp duty holiday in England and Northern Ireland has been extended until the end of June. This means no tax charged on property sales of less than £500,000. The news will hopefully come as a relief to those buyers and sellers who have been desperately trying to get their sale completed in time to meet the previous deadline of 31st March.
Are you selling or buying a property and looking fo support? Contact our conveyancing team here.
£19m for domestic violence programmes
Domestic abuse schemes in England and Wales will receive an extra £19m from the government over the next two years. Most of the money will go towards programmes working with abusers, to reduce the risk of reoffending and funding network of respite rooms for homeless women.
Read more about the Domestic Abuse bill here.
Minimum wage to increase to £8.91 an hour from April
Millions of workers will see an increase in their wages next month as the National Living Wage will rise to £8.91 an hour. For the first time, the government’s highest rate will also include those aged 23 and over – people who previously fell under the lower wage bracket.
£5b in re-opening grants for business affected by coronavirus
The new business grants will offer up to £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.
£40m of new funding for victims of 1960s Thalidomide scandal
The Thalidomide scandal was one of the world’s worst drug disasters. Sunak accounted a new victim funding pot of £40m and a lifetime commitment, guaranteeing funding for ever.
Here is what was announced in the UK Budget 2021:
Economy update
The Office for Budget Responsibility (OBR) predicted GDP to grow by 4 per cent in 2021 and to regain its pre-pandemic level in the second quarter of 2022. However, unemployment still rises by a further 500,000 to a peak of 6.5 per cent at the end of 2021.
UK economy shrank by 10% in 2020
- Economy forecast to rebound in 2021, with predicted annual growth of 4% this year
- Economy forecast to return to pre-Covid levels by middle of 2022, with growth of 7.3% next year
700,000 people have lost their jobs since pandemic began
- Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted
UK to borrow a peacetime record of £355bn this year.
- Borrowing to total £234bn in 2021-22
Coronavirus response
Support for the self-employed also to be extended until September
- 600,000 more self-employed people will be eligible for help as access to grants is widened
£20 weekly uplift in Universal Credit worth £1,000 a year to be extended for another six months
Working Tax Credit claimants will get £500 one-off payment
An extra £1.65 billion cash injection to ensure the Covid-19 vaccination roll-out in England continues to be a success.
£100 million for a new Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes.
Taxation
No changes to rates of income tax, national insurance or VAT
- Tax-free personal allowance to be frozen at £12,570 from April 2021 levels to 2026
- Higher rate income tax threshold to be frozen at £50,270 from April 2021 levels to 2026
Corporation tax on company profits above £250,000 to rise from 19% to 25% in April 2023
- Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
Inheritance tax thresholds, pensions life time allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-26
- For the first time since 2004, no changes have been made to private pensions taxation
Health and Education
£1.65bn to support the UK’s vaccination rollout and £50m to boost the UK’s vaccine testing capability
£10m to support armed forces veterans with mental health needs
The Arts and Sport
Nearly £400m to help arts venues in England, including museums and galleries, re-open
£300m recovery package for professional sport and £25m for grassroots football
£1.2m to help stage delayed Women’s Euros football tournament in England in 2022
Extension of the Film & TV Production Restart scheme in the UK, with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
Business
Tax breaks for firms to “unlock” £20bn worth of business investment
- Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
£7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.
Lower VAT rate for hospitality firms to be maintained at 5% rate until September
- Interim 12.5% rate will then apply for the following six months
Business rates holiday for firms in England to continue until June with 75% discount after that
£5bn in Restart grants for shops and other businesses in England forced to close
- £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
Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
Contactless payment limit will rise to £100 later this year
Fuel and alcohol duties
All alcohol duties to be frozen for second year running
- No extra tax on spirits, wine, cider or beer
Fuel duty to be frozen for eleventh consecutive year
Tobacco duties to rise by inflation plus 2%
The environment and infrastructure
New UK Infrastructure Bank to be set up in Leeds
- It will have £12bn in capital, with aim of funding £40bn worth of public and private projects
£15bn in green bonds, including for retail investors, to help finance the transition to net zero by 2050
Nations and regions
£1.2bn in funding for the Scottish government, £740m for the Welsh government and £410m for the Northern Ireland executive
750 UK civil servants to be relocated to new Treasury campus in Darlington
£1bn fund to promote regeneration in a further 45 English towns, including Middlesbrough, Preston, Swindon, Bournemouth, Newark, West Bromwich and Ipswich
£150m for community groups to take over pubs at risk of closure
First eight sites announced for freeports in England: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside
2021 Budget in brief
Delivering the budget in Parliament Chancellor of the Exchequer Rishi Sunak said:
‘This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people.
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.’
View official Budget documents
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.