Chancellor Rishi Sunak has unveiled the contents of his Budget in the House of Commons.
Setting out the government's tax and spending plans for the year ahead, he announced new measures to help business and jobs through the pandemic and to support the UK's long-term economic recovery and a series of tax-raising plans to help rebalance the public finances.
Here is a summary of the main points.
- Office for Budget Responsibility (OBR) predicts the economy will return to pre-Covid levels by the middle of 2022, six months earlier than previously thought.
- OBR forecast economy will grow this year by 4 per cent, by 7.3 per cent in 2022, then 1.7 per cent, 1.6 per cent and 1.7 per cent up to 2025.
- Unemployment now expected to peak at 6.5 per cent, down from 11.9 per cent expected in the July 2020 forecast, meaning 1.8million fewer people out of work.
- Furlough scheme extended to the end of September 2021 under the current 80 per cent of salary rate. Employers asked to pay 10 per cent in July, then 20 per cent in August and September.
- Support for self-employed also goes on until September.
- £20 Universal Credit uplift remains in place for another six months.
- Apprentice grants for employers doubled to £3,000.
- £5billion fund for Restart Grants for businesses. Retailers will get up to £6,000 per site from April. Hospitality and leisure open later and will be able to claim up to £18,000.
- New recovery loan scheme for businesses of £25,000 to £10million, 80 per cent guaranteed by the Government.
- Business rate holiday in place until June and discounted for the remaining nine months of 2021-22 financial year.
- 5 per cent VAT rate for the hospitality sector extended to September, then at 12.5 per cent until April 2022 before returning to 20 per cent regular rate.
- Stamp Duty holiday extended until June for homes worth up to £500,000, then phased back in.
- Mortgage guarantee scheme for those with a 5% deposit to boost home sales.
- UK's total public spending bill estimated at £407billion.
- The UK has borrowed £355billion - 17 per cent of GDP - the highest since the Second World War.
- No income tax, VAT, or national insurance rises.
- The tax-free income threshold will rise to £12,570 next year and then frozen until 2026.
- The higher rate threshold rises to £50,270 next year and then frozen until 2026.
- Corporation Tax increased to 25 per cent in 2023.
- Small Profit Rate of 19 per cent set up for small businesses.
- Inheritance tax thresholds, pensions lifetime allowance, and annual exempt amount in capital gains tax maintained at current levels until April 2026.
- Alcohol duty was frozen.
- Fuel duty was frozen.
What does it mean for employers?
Undoubtedly, the most important announcement for employers to come out of this year’s budget has to be the extension of the Coronavirus Job Retention Scheme until 30 September 2021, which will provide a lifeline to organisations that will still be affected by restrictions on social contact into the summer months.
However, numerous surprises were revealed in chancellor Rishi Sunak’s budget, including two “help to grow” schemes to enable small businesses to recover; an unsponsored points-based visa for high-skilled science “entrepreneurs”; and “restart grants” for retail, hospitality and leisure businesses.
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As events continue to unfold, there is no doubt that the weeks and months ahead are going to be challenging for employers and employees. The priority now is ensuring your business and people can progress and succeed in the uncertain environment we are faced with. We are ready to help you as you face the future. Contact us today at email@example.com.