Budget 2021: Everything you need to know

Chancellor Rishi Sunak has revealed his Spring 2021 budget in the House of Commons this afternoon (Wednesday 3 March).

The furlough scheme will be extended until September, there will be additional grants for the self-employed and businesses, and the business rates holiday for the retail, hospitality and leisure sectors will be extended.

 

Furlough

The furlough scheme is to be extended to the end of September.

Employees who are furloughed will continue to receive 80% of their salary until the end of the scheme.

From July employers will need contribute 10% of employee salaries, rising to 20% in August and September.

 

Self-Employment Income Support Scheme

A fourth grant covering February to April will be available for those who are self-employed, worth 80% of their average monthly trading profits.

A fifth grant will be available from June onwards. Where a businesses turnover has fallen by at least 30% due to coronavirus, for the fifth grant, self employed people will be granted 80% of their average monthly profits. If turnover has fallen by under 30%, a 30% grant of profits will be available.

Over 600k more people can claim the fourth and fifth grants, as these grants will be open to newly self-employed people who have now filed their 2019/2020 tax returns.

The eligibility criteria remains the same as for the previous grants, with people needing to have had trading profits of no more than £50,000, making up at least half of their total income.

 

Universal Credit

The weekly £20 increase to Universal Credit will continue until September with a one-off payment of £500 to eligible Working Tax Credit claimants across the UK.

 

Cash grants for businesses

A new restart grant will be available from April. Up to £6,000 grant will be available to business in the non-essential retail sector.

A one off cash grant for the hospitality and leisure sectors, including personal care, will be available in April for up to £18,000.

 

Business rates and VAT

The retail, hospitality and leisure sectors will benefit from a three months’ 100% business rates holiday to the end of June. From July, rates will be discounted by up to two thirds of their value.

The reduction in VAT to 5% for hospitality, accommodation and attractions will be extended until the end of September. This will then rise to 12.5% from October 2021 for six months, returning to the usual 20% rate from 1 April 2022.

 

Loans

A new UK-wide Recovery Loan Scheme will make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.

 

Stamp duty

The temporary change to the threshold for stamp duty land tax – will remain at £500,000 until 30 June 2021.

A nil rate band will then apply on properties up to £250,000 until the end of September, and the usual nil rate band will apply on properties up to £125,000 from October 2021.

Mortgage guarantee

A new mortgage guarantee scheme will enable all UK homebuyers to  secure a mortgage up to £600,000 with a 5% deposit.

 

Income tax rates

The threshold for paying the basic rate on income tax will rise to £12,570 next year. 

For higher-rate payers, the threshold will be £50,270.

Both rates will then stay the same until 2026, instead of increasing each year.

 

Alcohol and fuel duties

A planned increase on alcohol duties has been cancelled and fuel duty will also be frozen.

 

Corporation Tax

Corporation tax will rise to 25% in 2023 for businesses with profits of over £250,000

A Small Profits Rate will mean only 10% of businesses will be taxed at the 25% rate.