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Spring Budget 2021

Chancellor of the Exchequer, Rishi Sunak, has today delivered the Spring budget 2021.

The Budget report can be read in full here:
Budget 2021: Protecting the jobs and livelihoods of the British people

The Budget focused on measures to support the country through the Covid-19 pandemic and rebuild the economy long-term.

Chancellor Sunak set out a three-point plan for protecting jobs and livelihoods:

1. Continue doing “whatever it takes” to support people and businesses;
2. Once the economy is on its way to recovery, begin fixing the public finances; and
3. Begin the work of building the future economy.

The key measures are as follows:

Supporting people and businesses

Jobs and income:

- The furlough scheme will be extended until the end of September, with businesses asked to contribute 10% of employee wages from July, and 20% in August and September.

- The Self-Employment Income Support Scheme (SEISS) will continue until September. The fourth grant will cover the period from February to April and the fifth will cover May onwards.

- Support under the SEISS will be targeted at people whose turnover has fallen by 30% or more. These people will receive the full grant, covering 80% of income. Those whose turnover has fallen by less than 30% will receive a grant covering 30% of income.

- Eligibility for the SEISS will also be widened to cover 600,000 more people who filed a tax return in 2019-20 for the first time.

- The £20 uplift to Universal Credit and Working Tax Credit will continue for a further six months.

- The apprenticeship hiring incentive will be extended to September 2021, and the payment increased to £3,000.

- An additional £126 million will increase the number of traineeships – high-quality work placements and training for 16-24 year-olds – in England to 40,000.


Supporting vulnerable people:

- £19 million in new funding will support domestic violence programmes to pilot a new network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending.

- £10 million will support veterans’ mental health.

- Funding for survivors of the thalidomide scandal will be extended with a down payment of £40 million, and there will be a new lifetime commitment guaranteeing that support will be in place forever.


Business:

- New Restart Grants will be available from April to help businesses reopen. Non-essential retail businesses will be able to claim up to £6,000 per premises, while businesses in sectors like hospitality, leisure, personal care and gyms, which have been closed for longer and require greater adjustment measures, will be able to claim up to £18,000 per premises. This brings the total cash support for businesses up to £25 billion.

- £700 million will support arts, culture and sporting institutions as they reopen. This will go toward the UK and Ireland’s bid to host the 2030 World Cup, grassroots sport, a new approach to apprenticeships in the creative industries, and an extension of the Film & TV Production Restart Scheme.

- A new recovery loans scheme will be launched, allowing businesses of any size to apply for loans of up to £10 million until the end of the year, with an 80% Government guarantee offered to lenders.

- The Business Rates holiday will continue at 100% until the end of June. For the remaining nine months of the financial year, Business Rates will be discounted by two thirds, up to £2 million for businesses that have had to close, with a lower cap for those able to stay open.

- The hospitality and tourism sector will see the 5% reduced VAT rate extended for six months to 30 September. It will then pay a 12.5% rate for another six months, and return to the standard rate next April.


Housing:

- The £500,000 nil rate stamp duty band will end on 30 June, rather than at the end of March. The nil rate band will then go down to £250,000 until the end of September, and will return to its previous, £125,000 rate from 1 October.

- The Chancellor announced a new mortgage guarantee, that will allow the purchase of homes with a 5% deposit. The largest mortgage lenders will begin offering 95% mortgages from next month.


The Chancellor stated that overall, an additional £65 billion of measures were announced at this Budget. This brings the total coronavirus support from Government, from last year’s Spring Budget until now, to £407 billion.


Fixing the public finances

The Chancellor explained that the Government is borrowing 17% of national income, and next year borrowing will be 10.3% of GDP. He stated that the measures announced today will mean that borrowing will fall to 4.5% of GDP in 2023, then 3.5%, then 2.9%, then 2.8% by 2026.

These measures were as follows:

- Income tax, national insurance, and VAT will not see any rises.

- Personal tax thresholds will be frozen. The basic allowance will rise, as planned to £12,570 next year, and the higher rate threshold will also go up to £50,270. Both will then be frozen at this level until 2026.

- Until April 2026, the inheritance tax threshold, pension lifetime allowance, capital gains tax and VAT registration threshold will all be frozen.

- In 2023, Corporation Tax will rise from 19% to 25%. Companies with profits of less than £50,000 will still pay 19%, which means that only 10% of firms will pay the higher rate.

- Companies will be able to carry back losses of up to £2 million for three years, so will be able to claim an additional tax refund of up to £760,000.

- Planned increases in duties for spirits will be cancelled, with all alcohol duties frozen for the second year in a row. The planned increase in fuel duty will also be cancelled.


Building the future economy

Banking and investment:

- A new super-deduction will be introduced, meaning that for the next two years, when companies invest, they can reduce their tax bill by 130% of the cost.

- A new UK infrastructure bank will be established, located in Leeds to invest in public and private projects across the UK, financing a “Green Industrial Revolution”, with capitalisation of £12 billion.

- £20 million will fund a UK-wide competition to develop floating offshore wind demonstrators.

- The Government will launch a sovereign green bond, and wants to make the City a global leader for voluntary high quality carbon offset markets.

- At least £15 billion of green gilt finance will fund projects to tackle climate change and other environmental challenges in the coming financial year, as well as funding infrastructure investment and the creation of green jobs.

- A new UK-wide scheme called Help to Grow will help small and medium-sized businesses access world class management training, mentoring and peer learning, with the Government contributing 90% of the cost.

- Help to Grow Digital will help small businesses to develop digital skills with expert training and discounts on software worth up to £5,000 each.


Research and Development:

- An extra £1.6 billion will be allocated for the vaccine rollout.

- The Government is launching two consultations on research and development tax reliefs and enterprise management, to ensure they are internationally competitive.

- Visa reforms aimed at attracting highly skilled migrants will be undertaken. These will include a new, unsponsored, points-based visa.

- The pensions industry will be given more flexibility to unlock pension funds into innovative ventures.


Regional growth:

- The devolved administrations will receive £1.4 billion of funding outside the Barnett formula allocations related to the Budget. This will fund initiatives like new City and Growth Deals in Scotland and Wales and support for businesses in Northern Ireland to manage new trading arrangements.

- The Government will establish a new economic campus in Darlington, where departments including the Treasury, Business, Energy and Industrial Strategy, International Trade, and Housing, Communities and Local Government will all have sites.

- Over £1 billion will support 45 further towns in England through the Towns Fund.

- A £150 million Community Ownership Fund will allow communities to invest and protect local assets like pubs, theatres, shops or local sports clubs.

- The first round of the £4.8 billion Levelling Up Fund has been launched today, inviting applications from local areas across the UK.

- Eight new Freeport locations were announced in England, based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.