In today’s budget, Chancellor Rishi Sunak made a range of announcements to aid the recovery from COVID-19 debt.
Here are the highlights from his speech:
1. Economic Recovery
The Office for Budget Responsibility forecasts that the UK economy will return to pre-COVID levels by the middle of next year, sixth months earlier than previously thought.
Meanwhile, unemployment is expected to peak at 6.5%.
2. Furlough Scheme Extended till September
Millions of workers will continue to have 80% of their wages paid as the furlough scheme is extended until the end of September 2021.
There will be no change for employees who will continue to have 80% of their wages paid for hours not worked.
Employers however will be expected to contribute as they reopen. Nothing will change until July, when employers will be asked to contribute 10%, increasing to 20% in August and September.
3. More Support for Self-Employed
The self-employment support scheme will be extended until the end of September with 600,000 more people being eligible.
When the scheme originally launched, newly self-employed couldn’t qualify because they hadn’t all filed a 2019 – 20 tax return. Providing they filed their tax return by midnight last night, self-employed will now be able to claim the fourth and fifth grants.
The fourth grant will provide a taxable grant calculated at 80% of 3 months’ average trading profits and will be paid out in a single instalment capped at £7,500 in total.
The fifth and final grant covering May to September will be worth:
- 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
- 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%
4. New Visa Reforms for Science, Research & Tech
Visa reforms are being introduced to make it easier to attract the best and most promising international talent in science, research, and tech. We will have more on this soon.
5. Business Support
The 100% business rate relief will continue until June and then be reduced to two-thirds until the rest of the year.
Bounce-back loans will be replaced by a new recovery loan scheme.
Emergency loans of between £25,000 and £10m will be available as well as re-start grants of up to £6,000 for non-essential retailers, and up to £18,000 for hospitality and personal service businesses.
Companies will also be able to offset losses against their tax bills going back up to three years, allowing them to claim additional refunds of up to £760,000.
Corporation tax is set to increase to 25% in April 2023, however companies with profits of £50,000 or less will still only be liable for the current 19% rate. Only those with profits of £250,000 or more will pay the full 25%.
Businesses will also be given incentive payments of £3,000 for all new apprentice hires of any ages while £126m will be invested to triple the number of new traineeships.
Businesses are also incentivised to invest and can reduce their taxable income by 130% of the amount they invest.
A new ‘help to grow scheme’ will offer smaller businesses management and digital training. You can register your interest here.
6. Personal Tax
Personal tax thresholds will be frozen with the income tax threshold increasing to £12,570 next year and kept at this level till 2026. The higher rate threshold will rise to £50,270 next year and will also stay there until 2026.
Thresholds for inheritance tax, pension lifetime allowance and capital gains tax thresholds are also being frozen.
7. New Freeports
Eight freeports have been announced. These are special economic zones with different rules to make it cheaper and easier to do business. They are:
- East Midlands Airport
- Felixstowe and Harwich
- Liverpool City region