At lunchtime today, Rishi Sunak spoke about the UK’s new spring budget for 2021.
Sunak said that the Covid support measures are now worth more than £400bn. This has been weaved in largely to the 2021 budget. Read below, to find out the high level overview of what he has spoke about today.
If you are interested in how the Spring 2021 budget affects your personal finances click here.
If you are interested in how the Spring 2021 budget affects your business finances click here.
If you are interested in how the Spring 2021 budget affects other areas of the economy click here.
- There will be an extension on the stamp duty holiday will remain until September 30th 2021.
- The mortgage guarantee scheme will encourage lenders to lend mortgages of up to 95%
- Personal tax allowance will be frozen until 2026, at a slightly higher rate of £12,570. The higher rate threshold will go up to £50,270.
- Income tax, national insurance or VAT will not be increased.
- The government will launch a world-leading sovereign green bond.
- Universal Credit – £20 per week uplift extended for 6 months
- The minimum wage is to increase to £8.91/hour from April 2021.
- Inheritance tax, pension tax life-time allowance, and capital gains annual allowance to remain frozen until 2026
- Furlough will be extended from the original end date of end of June 2021, to the end of September 2021. It remains at 80%.
- Corporation tax to rise from 19% to 25% from April 2023. However, if you make less than £50,000 in profit, you will still only pay 19%.
- For the first time in modern British history, the government is imposing a super-deduction tax break for firms that invest. This will allow their tax bill to be reduced by 130% of what they spend on investment. This has never been tried- but it has an expectation of increasing investment across the country by 10%.
- The alcohol duty will be frozen for the second year in a row, and fuel duty for the 11th year in a row.
- Business rates holiday extended until end of June.
- The VAT registration threshold of £85,000 is to remain frozen for the next 2 years
- Sunak is launching a programme to help firms with digital skills.
- An extra £1.6bn is to be allocated for the vaccine rollout.
- There will be a new visa system for people with high-level skills, encouraging professionals to move to the UK.
- There will be eight locations for free ports (the idea being they have different rules- making it easier and cheaper to do business. Simpler planning rules will help the construction of infrastructure).
- The free ports so far are: East Midlands Airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside and Solent. On this, Sinak said “I see old industrial sites being used to capture and store carbon, vaccines being manufactured, offshore wind turbines, creating clean energy for the rest of the country, all located within a free port, with a Treasury just down the road, and the UK infrastructure bank only an hour away.”
Sunak also spoke about growth of the economy. We’ve taken BBC’s graph here to display what the new predictions of GDP growth the government has.
For the economists amongst us, Rishi Sunak’s approach is essentially using a fiscal drag policy – which means pushing people to earn more through lending, deductions, and tax-breaks, which will therefore drag them into higher tax brackets which enables the government to increase the tax they receive without actually increasing any tax rates.
All being said, the election period is in May 2024 and all of this could change when someone new comes to power. Until then, the details in this article is what we expect to see.
Wondering how the new budget affects you and your company? Contact us here for a free review of your current position.