Budget 2021: what you need to know and how it affects you
All eyes were on Rishi Sunak as he delivered his spring budget, vowing to make sure that no-one was forgotten as he spoke about the latest support for people’s jobs and finances. For many, there were many welcome announcements such as the extensions to the furlough scheme, Universal Credit increase and also the cost of the living wage. Also, wine and beer duties were frozen for the second year in a row. Let’s look through the 2021 Budget 2021.
The Government have committed further spending in the Budget 2021 to provide vaccines and have also extended £500 Test and Trace support payments until the summer months.
An extra £1.65 billion cash injection to ensure the Covid-19 vaccination roll-out in England
£28 million to increase the UK’s capacity for vaccine testing, support for clinical trials and improve the UK’s ability to rapidly acquire samples of new variants of COVID-19.
£22 million for a world-leading study to test the effectiveness of combinations of different Covid-19 vaccines. This will also fund the world’s first study assessing the effectiveness of a third dose of vaccine to improve the response against current and future variants of COVID-19.
£500 Test and Trace support payments in England extended until the summer.
Protecting jobs and livelihoods
The section of the Budget 2021 which many of us were looking to, was the financial support for many people’s jobs and livelihoods.
Furlough and Universal Credit extended until September
Six-month extension of the £20 per week Universal Credit uplift in Great Britain
Northern Ireland Executive receiving additional funding to match the increase
A one-off payment of £500 to eligible Working Tax Credit claimants across the UK
Many people will be relieved that the furlough scheme will now be extended until September. For many including myself, employers chose now to furlough and so are relying on Universal Credit. Thankfully the additional £20 has also been promised until September, which is a significant amount for anyone on benefits.
Benefits for Self Employed mean people can claim for the first time
An extension of the UK-wide Self Employment Income Support scheme to September 2021. 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
Extension to Stamp Duty Land Tax and 95% Mortgages
An extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September.
A new mortgage guarantee scheme will enable all UK homebuyers to secure a mortgage of up to £600,000 with a 5% deposit.
Financial support for hospitality, accommodation, leisure, personal care and gym businesses
750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.
£5 billion for new Restart Grants – a one-off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million. Asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
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.
Extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.
Focus for apprenticeships and traineeships
Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
£7 million for a new “Flexi-job” apprenticeship programme in England
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.
Contactless payments increased from £45.00 to £100.00
More than double the legal limit for single contactless payments, from £45 to £100
£90 million in funding to support our government-sponsored national museums in England due to the financial impact of Covid-19.
£300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia.
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.
To further support the cashflow of businesses, the government is extending the loss carry-back rules worth up to £760,000 per company.
£100 million for a new Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes.
Domestic abuse to be given more funding given that this has increased during Covid-19 times
£19 million has been dedicated to tackling domestic abuse in England and Wales. Funding for a network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending.
3. Strengthening public finances
Interestingly fuel and alcohol duties were frozen this year in the Budget 2021, which is what I had anticipated being the first to rise. Especially given that so many people have been drinking at home in lockdown.
Maintaining the income tax Personal Allowance and higher rate threshold from April 2022 until April 2026.
Maintaining inheritance tax thresholds at their current levels until April 2026.
Fuel duty will be frozen for the 11th consecutive year.
Alcohol duties will be frozen across the board for the second year running saving drinkers £1.7 billion.
Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).
Maintaining the Lifetime Allowance at its current level of £1,073,100 until April 2026.
Adult ISA limit to remain unchanged at £20,000
The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000. So definitely look to start using this from April if you can.
Rise in Corporation Tax to be postponed
The rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until 2023.
Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%. A taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
4. Budget 2021 – An investment-led recovery
The budget also focussed on boosting digital skills, investment in equipment and science. Beginning April 2021, the new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
Future Fund: Breakthrough
The £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.
Reforms to the immigration system will help ambitious UK businesses attract the brightest and best international talent.
Finance schemes to boost skills and attract talent from overseas
A new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost.
£2.8 million to support a UK and Ireland bid to host the 2030 World Cup and £25 million investment in UK grassroots sports, enough for around 700 new pitches.
Launching a review of Research & Development tax reliefs to make sure the UK remains a competitive location for cutting-edge research.
£20 million to fund a UK-wide competition to develop floating offshore wind demonstrators. As well as support the government’s to generate enough electricity from offshore wind to power every home by 2030.
£68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
£4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.
Publication of the government’s Build Back Better: our plan for growth’.
Over £1 billion funding for a further 45 towns in England through the Towns Fund. Supporting their long-term economic and social regeneration as well as their immediate recovery from the impacts of COVID-19.
Queen’s Platinum Jubilee celebrations in 2022
£28 million to fund the Queen’s Platinum Jubilee celebrations in 2022, delivering a major celebration for the UK.
Green jobs to be introduced across the UK
Plans for at least £15 billion of green gilt issuance in the coming financial year, to help finance critical projects to tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK.
£150 million Community Ownership Fund
£150 million Community Ownership Fund will allow communities across the UK to invest to protect the assets that matter most to them such as pubs, theatres, shops, or local sports clubs. £18.8 million has also been set aside to transform local cultural projects in Hartlepool, Carlisle, Wakefield and Yeovil.
£4.8 billion UK-wide Levelling Up Fund
Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22.
5. Scotland, Wales and Northern Ireland
The Budget 2021 offers much localised grants and support, some of which have been outlined below.
Individuals and businesses in Scotland, Wales and Northern Ireland continue to be supported by the UK Government through the Coronavirus Job Retention Scheme, self-employment grants, loan schemes and VAT cuts. Devolved administrations have received Barnett funding to provide support in areas of devolved responsibility.
The Budget confirms an additional £2.4 billion for the devolved administrations for 2021-22 through the Barnett formula. This is an additional £1.2 billion for the Scottish Government, £740 million for the Welsh Government, £410 million for the Northern Ireland Executive.
The devolved administrations will also receive £1.4 billion of funding in 2021-22 outside the Barnett formula.
£27 million in the Aberdeen Energy Transition Zone and £5 million in the Global Underwater Hub in Scotland, the first stage in delivering the North Sea Transition Deal.
Three Growth Deals in Scotland – Ayrshire, Argyll & Bute, and Falkirk – will receive funding more quickly.
£4.8 million to support the development of a demonstration hydrogen hub in Holyhead, Anglesey.
Up to £30 million for the Global Centre for Rail Excellence in Wales.
Three City and Growth Deals – in North-Wales, Mid-Wales and Swansea Bay – will receive funding more quickly.
Northern Ireland will benefit from the Corporation Tax exemption for the Northern Ireland Housing Executive, Northern Ireland’s biggest landlord.
Almost half of the £400 million New Deal for Northern Ireland funding has been allocated