Got-to Guide at a Glance: Budget 2021
The Chancellor of the Exchequer, Rishi Sunak, has delivered his budget speech. He announced that he expects the UK economy to recover more quickly than initially expected, so his budget reflects that optimism, while balancing giveaways with tax rises and freezes on some allowances.
Government Grants to Individuals
Furlough Payments
The Coronavirus Job Retention Scheme, through which the government makes furlough payments of 80% of income to employees unable to work due to lockdown restrictions is to be extended until the end of September. The scheme, which is thought to have protected 11 million jobs, was due to end at the end of April.
Employers will be liable to pay 10% of employees’ wages as of July, rising to 20% in August and September.
Self-Employment Income Support Scheme
This scheme, which pays grants to self-employed individuals and members of partnerships whose business income has been negatively affected by coronavirus. It has offered grants in three rounds of funding and it is now extended for affected individuals to apply for a fourth grant.
It mirrors the Coronavirus Job Retention Scheme for employed people in paying 80% of 3 months’ worth of average profits, with a maximum of £7,500 per payment.
Universal Credit
Universal Credit has been boosted by £20 per week since April 2020. This will continue for a further 6 months.
Working Tax Credit
This is mirrored for recipients of Working Tax Credit, who receive a lump sum of £500 to cover the next six months.
Income Tax
Personal Allowance and basic rate limit maintained at their 2021 to 2022 levels until April 2026.
Minimum wage to increase from April to £8.91/hour.
Purchase Taxes
Fuel Duty and Alcohol Duty are frozen at current rates
Inheritance Tax
Thresholds maintained at current levels until April 2026.
Contactless Payments
The legal limit for each contactless payment rises from £45 to £100, reflecting the way people and businesses prefer to process payments to limit cross-infection
Pensions – Lifetime Allowance (the total amount eligible in your pension fund for tax relief) in maintained at the current level of £1,073,100 until April 2026.
Savings – Adult ISA annual subscription limit maintained at the current level of £20,000.
Property
Stamp Duty Holiday Extended and Tapered
The Stamp Duty Land Tax Holiday in England is to be extended until the end of June. This means that first-time buyers and those buying property to replace their main residence on properties with a purchase price of up to £500,000 will continue to pay zero Stamp Duty.
Thereafter, until the end of September, the zero rate will apply to such purchases up to a value of £250K, before returning to its standard ceiling of £125K on October 1st.
See our Stamp Duty Holiday article for more details.
Mortgage Guarantee Scheme
The government is to guarantee 95% mortgages on properties up to a value of £600,000 for any buyer who applies, to move ‘generation rent’ to ‘generation buy’ and remove risk from lenders.
Businesses
Restart Grants – All retail, hospitality, accommodation, care and gym businesses in England that have had to shut their doors because of coronavirus are eligible for a cash grant of up to £18,000 to restart operations.
Recovery Loan Scheme loans for businesses across the UK of £25,001 to £10 million, and asset and invoice finance between £1,000 and £10 million. Government backs 80% of approved loans.
VAT 5% rate for hospitality, accommodation and attractions extended until the end of September, then tapered to 12.5% to 31 March 2022.
New Help to Grow scheme: business and digital skills programme for SMEs with 5-249 employees.
