The Budget 2021

March 3, 2021 Charles Cummins

The Chancellor of the Exchequer has delivered his Budget Statement to the House of Commons. Below is a summary of the announcements in his speech. The main Budget documents can be downloaded here.

 OBR figures and forecast

 The OBR has published its latest figures on the economic and fiscal outlook:

 

  2021 2022 2023 2024 2025
GDP growth (%) 4.0 7.3 1.7 1.6 1.7
Inflation CPI (%) 1.5 1.8 1.9 1.9 2.0
Inflation RPI (%) 2.5 2.0 2.4 2.7 3.0

 

  2021-22 2022-23 2023-24 2024-25 2025-26
Borrowing (£bn) 233.9 106.9 85.3 74.4 73.7
Deficit (% of GDP) 10.3 4.5 3.5 2.9 2.8
Debt (% of GDP) 93.8 96.0 97.1 97.0 96.8

Coronavirus

Support for people and welfare

  • Universal Credit – Six month extension of the £20 weekly Universal Credit uplift, and a £500 one off payment for those receiving Working Tax Credits

Housing support

  • Stamp Duty – £500,000 Stamp Duty Land Tax nil rate extended by three months until end of June 2021, decreasing to £250,000 until the end of September 2021, returning to £125,000 level from 1st October 2021
  • Mortgage Guarantees – Government to provide lender guarantees on 95% mortgages where buyers can only afford a 5% deposit

Support for Business

  • Furlough Scheme – Extended until the end of September 2021. Businesses will be asked to contribute 10% of the wages of those on furlough in July and 20% of the wages of those on furlough in August and September
  • Self-Employed Grants – Two further grants for the self-employed – a fourth grant covering the period February, March, April at 80% of average trading profits; and a fifth and final grant covering the period May, June, July, at 80% for those whose turnover has reduced by 30% or more, or 30% for those whose turnover has reduced by less than 30%. The grants can be claimed by those who filed tax returns for the 2019/20 financial year, by midnight last night (2nd March 2021)
  • Apprentices – Incentive payments for businesses to take on apprentices of any age doubled to £3,000 per new apprentice
  • Retail Restart Grants – Up to £6,000 per non-essential retail premises on reopening
  • Hospitality Restart Grants – Up to £18,000 for hospitality and leisure businesses reopening later
  • Arts, Culture and Sport – £700m for arts, culture and sporting institutions as they reopen
  • Government-backed Loans – 80% Government guarantee for lenders of loans of between £25,000 and £10m for businesses of any size
  • Business Rates – 100% Business Rates holiday for retail, hospitality and leisure sectors extended by three months up until the end of June 2021, and then a 66.6% Business Rates holiday until the end of March 2022 (up to a value of £2m for closed businesses, and a lower cap for those who remained open)
  • Hospitality VAT Rate – 5% reduced rate of VAT for hospitality and tourism extended for six months until the end of September 2021, with an interim rate of 12.5% for a further six months until end of March 2022

Health support

  • Vaccinations – Additional £1.6bn for continued rollout of vaccination programme and to improve future preparedness

Post-Coronavirus measures

Tax

  • Income Tax thresholds – Personal allowance threshold frozen for a year, raised to £12,570 in April 2021, then retained at this level until April 2026. The higher rate threshold will be increased to £50,000 remaining at this level until April 2026
  • Inheritance tax threshold, pensions lifetime allowance, Capital Gains Tax annual exempt amount – Maintained at current levels until April 2026
  • VAT registration threshold – Maintained at current level from April 2022 to April 2024
  • Corporation Tax – Increasing to 25% from April 2023. New Small Profits Rate for businesses with profits of up to £50,000 who will pay the current rate of 19%, with the rate tapering up to 25% for profits of up to £250,000
  • Losses – Businesses can carry back losses of up to £2m for three years, enabling affected businesses to claim tax refunds of up to £760,000
  • Bank surcharge – Government to review 8% bank surcharge to ensure combined rate of tax on UK banking sector doesn’t increase significantly from current level and remains internationally competitive
  • Investment super-deduction – Businesses that spend on investment can reduce their tax bill by 130%
  • Alcohol duties – Planned increases in all alcohol duties cancelled and alcohol duties frozen
  • Fuel duty – Planned increase cancelled

Support for Business

  • UK Infrastructure Bank – To be located in Leeds, with an initial capitalisation of £12bn beginning in Spring, with the expectation it will support at least £40bn of total investment in infrastructure
  • Offshore Wind – Government to fund new port infrastructure to build next generation of offshore wind projects in Teesside and Humberside
  • Sustainability – Dame Clara Furse to establish a new group to position the City of London as the global leader for voluntary high carbon offset markets
  • Productivity: Help to Grow Management – New Help to Grow Management scheme to help businesses increase productivity through courses and mentoring for SMEs, with the Government contributing 90% of the cost of a new Executive Development Programme at business schools across the country
  • Productivity: Help to Grow Digital – Free expert training and 50% discount on new productivity enhancing software worth up to £5,000 for SMEs, launching in the Autumn
  • High Growth Innovative Companies – Two consultations launched on R&D Tax reliefs and Enterprise Management Incentives
  • Visa Reforms – New unsponsored points based visa to attract best international talent in science, research and technology, new improved visa processes for scale-ups and entrepreneurs and radically simplified technology for high-skilled visa applications
  • Funding for Innovative Companies – Pensions industry to be given more flexibility to unlock billions of pounds from pension funds into innovative new ventures; new Future Fund Breakthrough to be launched to fill the scale-up funding gap; and changes to the rules to encourage new companies to list in the UK

Further finance measures

  • Green Savings – Government to launch a new retail savings product to give all UK savers the chance to support green projects
  • Bank of England Remit Updated monetary policy remit, reaffirming 2% target, with a new remit to reflect the importance of environmental sustainability and transition to net zero.

Levelling up

  • City Deals – Accelerated in Ayrshire, Argyll & Bute and Falkirk, North Wales, Mid-Wales and Swansea Bay
  • Growth Deals – Funding for the Holyhead Hydrogen Hub, Global Centre of Rail Excellence in Neath Port Talbot, Aberdeen Energy Transition Zone, Global Underwater Hub and North Sea Transition Deal
  • Devolved Funding – Barnett Formula implications of Budget increase funding by £1.2bn in Scotland, £740m in Wales and £410m in Northern Ireland
  • Treasury Darlington Campus – New HM Treasury Economic Campus to be established in Darlington
  • Towns Deals – £1bn for 45 new Towns Deals; National Infrastructure Commission asked to do a study on how to maximise the benefits of infrastructure policy and investment for towns
  • Levelling Up Fund – First round launched, with applications invited from local areas across the UK
  • Freeports – Eight freeport locations announced: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside

Welfare Support

  • Domestic Violence – Additional £19m for domestic violence programmes to reduce risk of reoffending and pilot network of respite rooms
  • Veterans – Additional £10m for Veterans mental health needs
  • Thalidomide victims – Lifetime funding for those affected by the Thalidomide scandal, with initial funding pot of £40m