Key announcements by the Chancellor
In his budget speech today The Chancellor has highlighted that the pandemic has fundamentally altered our lives with the economy having shrunk by 10% and borrowing reaching wartime levels.
Below we have summarised some of the key announcements.
There will be no rise in income tax, national insurance or VAT but the personal income tax allowance and higher-rate threshold will be frozen this year. More money would be provided for HMRC investigators to identify fraud relating to the coronavirus support measures.
The Self-Employed Income Support Scheme has been extended with grants to cover February to April. As before these grants will be worth 80% of average trading profits, up to £7,500.
The furlough scheme is to be extended until the end of September. Employers will continue to pay 10% of costs through to July, when their contribution will increase to 20%.
From April 2023 corporation tax will be 25%. To help protect small businesses a £50,000 small profits rate will be introduced, set at the current rate of 19%. Once a company’s profits rise above £50,000 a taper will apply, so that only businesses with profits above £250,000 will have to pay the 25% rate.
Form April 2021, for a two year period, companies can reduce their tax bill by 130% of the costs of investments.
5% reduced rate for hospitality will be extended to September, with a rate of 12.5% introduced until April next year.
Alcohol and fuel duties frozen again.
Business Rates Holiday
The businesses rates holiday for those in the hospitality and leisure sector will continue to the end of June, with a two-thirds discount offered for the remainder of the tax year.
Restart Grants to be offered to businesses in the hospitality, accommodation, leisure, personal care and gym sectors in England. These grants will be worth up to £18,000.
Recovery Loan Scheme
A new loan scheme, the Recovery Loan Scheme, will be launched. Loans under the scheme will have 80% of their value backed by Government. The loans offered under the scheme can range from £25,000 to £10m.
Holiday extended until the 30 June, with an interim threshold of £250,000 for three more months. From October, the threshold will return to £125,000.
New 5% deposit mortgages.
Universal Credit and Working Tax Credits
The £20 increase to universal credit will continue for six months.
Working Tax Credit claimants to be given a one-off payment of £500.
National Living Wage
The National Living Wage is to increase to £8.91 per hour.
The apprenticeship hiring incentive in England is to be extended to September 2021 and the payment will be increased to £3,000. Additionally, an extra £126m will be provided to fund 40,000 more traineeships in England for 16-24 year olds in 2021/22 academic year.