Key points of Budget 2021
Chancellor Rishi Sunak unveiled his 2021 budget.
– The Chancellor said the coronavirus has caused one of the “biggest, most comprehensive and long-lasting economic shocks this country has ever faced”.
– The Office for Budget Responsibility (OBR) now forecasts “a faster and more sustained recovery” than expected in November, predicting that the economy will be 3% lower than it would have been in five years due to the crisis coronaviruses.
– But the economy, according to the OBR, is expected to grow this year by 4%, by 7.3% in 2022, then by 1.7%, 1.6% and 1.7% in the last three years of prediction.
– Borrowing is expected to rise to £ 234 billion next year – 10.3% of gross domestic product (GDP), a measure of the size of the economy – but will drop to 4.5% of GDP in 2022-2023, 3.5% in 2023-24, then 2.9% and 2.8% the following two years.
– Measures to support the economy amounted to £ 65bn this year and next, bringing total government support to £ 407bn over this period, Mr Sunak said.
– The leave system will be extended until the end of September, as will aid for the self-employed.
– The universal credit increase of £ 20 per week will continue for another six months, well beyond the end of this national lockdown.
– A new restart grant will begin in April to help businesses reopen, with funding of £ 5 billion.
– The Chancellor has confirmed an additional £ 1.6bn for the coronavirus vaccine rollout and to ‘improve future preparedness’.
– Business tariff holidays for the retail, hospitality and leisure sectors will continue until the end of June and will be reduced by two-thirds for the remaining nine months of the year.
– The reduced VAT rate of 5% for the tourism and hospitality sector will be extended for six months until the end of September, with a provisional rate of 12.5% for six additional months.
– The stamp duty reduction will continue until the end of June, with a zero rate bracket set at £ 250,000 – double its standard level – until the end of September.
– A payback loan scheme will replace previous coronavirus loan packages, allowing businesses of all sizes to apply for loans ranging from £ 25,000 to £ 10million until the end of the year, the government providing lenders with an 80% guarantee.
– The corporate tax rate, paid on corporate profits, will rise to 25% in April 2023 – but small businesses with profits of £ 50,000 or less will continue to be taxed at 19%.
– There will be a “super deduction” for businesses when they invest, reducing their tax bill by 130% of the cost for the next two years.
– Income tax, national insurance and VAT rates kept at the same level, but personal income tax thresholds will increase next month and will be maintained at these rates until April 2026.
– The threshold for inheritance tax and life annuity will be maintained at its current levels, as well as the annual amount exempt from capital gains tax, until April 2026 and, for two years from April 2022 , the VAT registration threshold.
– The minimum wage will drop to £ 8.91 an hour from April.
– On apprenticeship, government to double incentive payments to companies to £ 3,000 for all new hires, of all ages.
– All alcohol duties are frozen for the second year in a row and the planned increase in fuel duties is also canceled.
– A “mortgage guarantee” has been announced, lenders who provide mortgages to homebuyers who can only afford a 5% down payment with a government guarantee on these mortgages.
– The UK Infrastructure Bank will be located in Leeds, while the Treasury is to establish a new economic campus in Darlington, the Chancellor revealed.
– Freeports – “special economic zones with different rules to make doing business easier and cheaper” – will be located at East Midlands Airport, Felixstowe and Harwich, the Humber area, the Liverpool City area, Plymouth , Solent, Thames and Teesside.
– There was more funding for decentralized administrations, with £ 1.2bn for the Scottish government, £ 740m for the Welsh government and £ 410m for the Northern Ireland executive.
– An additional £ 19million will be donated to domestic violence programs.
– Survivors of the thalidomide scandal will receive a ‘Lifetime Commitment’ with an additional £ 40million down payment.