On Wednesday 3rd March in the House of Commons, the Chancellor of the Exchequer, Rishi Sunak, delivered the 2021 UK Budget. In the announcement, many new measures were declared that will affect the lives of millions across the nation. Whilst many were previously predicted across news channels, hours and days before the official Budget announcement, there were some surprise releases.
We break down the key points of the UK Budget and who the necessary schemes and announcements will affect:
- The Chancellor announced that the economy will return to pre-COVID levels quicker than previously expected, by the middle of 2022.
- The Furlough scheme is to be extended to the end of September. Employees will continue to receive 80% of their wages until the end of the scheme, with firms asked to contribute 10% in July and 20% in August and September as the scheme is gradually comes to an end.
- The Self-Employed Income Support Scheme (SEISS) is also extended for a fourth time. This will cover February to April and will be calculated at 80% of average trading profits up to a maximum of £7,500.
- A £5billion restart grant is announced, aiding businesses to return to normality post-lockdown. This takes the help to businesses during the pandemic to £25bn.
- A 5% reduction rate, worth £5bn, on VAT for businesses is extended until September. This will then be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022.
- Hospitality and leisure businesses will pay no business rates for three months in a £6bn tax cut. These rates will then be discounted by two thirds for the remaining nine months of the year.
- The Stamp Duty Holiday is extended to the end of June, for properties up to £500,000. This will then be doubled the standard rate from June to October, before returning to its normal rate.
- From April 2023, Corporation Tax rates will be increased to 25% for companies whose profits are more than £250,000 (an estimated 10% of all businesses).
- An investment of £25bn through a 130% ‘super-deduction’ on tax for investments made by companies. This allows firms to cut taxes by up to 25p for every pound invested.
- Alcohol and fuel duty to be frozen.
- A national infrastructure bank to open in Leeds, with a £12bn injection from the government to support green projects through a green recovery bond.
- Introduction of eight ‘freeports’ (special economic zones with differing rules to make business easier and cheaper). These include East Midlands airport, Felixstowe and Harwich, Humber, Liverpool city region, Plymouth, Solent, Thames and Teesside.
We hope this has outlined to you the new UK Budget 2021 announcements and whether you will be affected. If you require any more information on the UK Budget announcements, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.