With coronavirus restrictions finally starting to ease and the UK navigating the government’s Roadmap out of Lockdown, the 2021 budget is crucial for both businesses and individuals. With today’s budget, Rishi Sunak has pledged to support the British people through this current economic crisis, devising a Three-Point Plan designed to protect jobs and strengthen public finances. Think Plutus has formulated an in-depth overview of the main points that will affect you in this year’s budget.
Extension to Coronavirus Job Retention Scheme
The CJRS is to be extended until the end of September 2021, meaning that the government will continue to pay 80% of employees’ wages for the hours they cannot work. Employers will gradually be asked to contribute more as the economy opens up again, being liable for 10% in July, which will subsequently rise to 20% in August and September.
Minimum wage rise and freeze on Income Tax
From 1st April 2021, the minimum wage is set to rise from £8.72 to £8.91. From April 2022 to 2026, the Personal Income Tax allowance is to be frozen at £12,570. The Higher Rate Income Tax threshold to be frozen during this same period at £50,270.
Rise in Corporation Tax
Corporation Tax is set to rise from 19% to 25% in April 2023, though companies with profits of less than £50,000 will continue to pay 19% after that date.
Further Restart Grants for businesses
Businesses that have endured hardship and losses due to covid-19 related closures are set to receive £5 billion in grants. Companies in the hospitality and leisure industries will be eligible to receive up to £18,000, while nonessential outlets which are preparing to reopen in April can receive up to £6,000. After a contraction of 10% in 2020, projections are showing growth of 4% this year. The Chancellor is hoping these grants will fuel that rebound.
Investment in the Covid-19 vaccination programme and other initiatives
Rishi Sunak has guaranteed £1.65 billion to support the UK’s Covid-19 vaccination rollout. He’s promised £19 million in funding to respite rooms for homeless women in other health-related initiatives. There will also be £40 million of funding for victims of the Thalidomide scandal in the 1960s, plus a pledge of lifetime support. Armed forces veterans with mental health needs will benefit from the support of £10 million.
Debt deductions cap for Universal Credit recipients
Claimants will be eligible to keep more of their Universal Credit benefit money from April 2021. The period over which to repay advance grants will be increased to two years, allowing claimants a more extended time over which they can make their repayments. Additionally, the deductions rate will be capped at 25% of the standard allowance, which reduces the previous 30%. The scheme to award an extra £20 a week to UC recipients is also to be extended for six more months.
Stamp Duty Land Tax holiday extension
The initiative allowing a Stamp Duty Land Tax holiday for properties purchased in England and Northern Ireland is extended to June 2021. With sales that cost under £500,000, there will be no tax liability.
The reaction to Rishi Sunak’s 2021 budget has received both positive acclaim and negative attention. For more information on this year’s budget and what it could mean for you, your business and your family, please take a look at the Think Plutus guide to the Budget 2021.