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Mini-Budget 2021 summary: strategising economic stability amidst COVID

on Thu, 04/03/2021 – 05:06
budget

Here are the key points from Chancellor Rishi Sunak's budget speech:

 

  • Chancellor confirms furlough scheme will be extended until the end of September, with the government paying 80% of salary - though employers will be asked to put in 10% from July and 20% from August.

 

  • Corporation tax is to increase to 25% in April 2023 - but it will still be the lowest rate in the G7, says the chancellor. However, 70% of companies - with profits of £50,000 or less - will still only be liable for the current 19% rate, while only those with profits of £250,000 or more will pay the full 25%

 

  • Personal income tax thresholds will be frozen from next year until 2026 - at £12,570 for the basic rate and at £50,270 for the higher rate - dragging more people into paying as their salaries rise in line with inflation. Thresholds for inheritance tax, pensions lifetime allowance and capital gains tax thresholds are also being frozen.

 

  • Mr. Sunak confirms that the government will guarantee 95% mortgages to help those who can only afford a 5% deposit.

 

  • The stamp duty holiday on properties worth up to £500,000 will be extended from the end of March 2021 until the end of June 2021 and after that there will still be no duty on homes worth up to £250,000 for another three months. After that the threshold returns to the usual level of £125,000 from October 2021.

 

  • Reduced rate of 5% VAT for the hospitality and tourism sectors has been extended to the end of September, and will only go up to 12.5% after that, before returning to 20% next April.

 

  • Companies will 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.

 

  • Bounce-back and other coronavirus loans for businesses will be replaced by a new recovery loan scheme, 80% guaranteed by the government.

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  • The temporary increase of £20 a week in universal credit will continue for a further six months. There will also be a one-off payment of £500 to working tax credit claimants.