Budget 2021 Summary
- March 2021
- 4 minutes
Chancellor Rishi Sunak delivered one of the most important Budgets we have had for years, with key announcements on the future of coronavirus income support and the big news on stamp duty, income tax, universal credit, the pension lifetime allowance, mortgages, contactless payments, and more.
Here are the key news below:
- The furlough scheme and self-employed income support has been extended- Furlough will run until the end of September-it had been due to close at the end of April- while the Self-Employment Income Support Scheme will be extended to 600,000 people who were previously excluded. A fifth grant for the self-employed has also been confirmed, with the amount you can claim depends on how much turnover’s changed.
- The current stamp duty holiday (England and Northern Ireland) will be extended until the end of June- The holiday means buyers don’t need to pay stamp duty on the first £500,000 of a property purchase-had been due to end on 31 March. But it will continue until the end of June. Then until September the point at which you start paying stamp duty will be cut to £250,000, before returning the usual £125,000 after that.
- New mortgage scheme to help buyers with 5%deposit- it will start from April and several major lenders have already agreed to take part.
- Universal Credit uplift of £20 per week will continue for another six months- plus working tax credit claimants will get equivalent support for a further six months. The suspension of universal credit minimum income floor has also been extended until August- good news for many self-employed claimants, as it means you are not assumed to be earning at least the minimum wage when the amount you are due is calculated.
- Income tax thresholds have been frozen after a rise this April many will pay more tax- The Chancellor said the Government would deliver on its promise to increase the personal allowance-the rate over which people start paying tax- to £12,570 next year, but it said it would then stay unchanged until April 2026. The higher rate threshold will be increased next year to £50,270 but will then also be frozen until 2026. The personal allowance applies across the UK, but the higher threshold for non savings and non dividend income only applies in England, Wales, Northern Ireland. When the Government hasn’t raised the taxes today its decision to freeze threshold means many who will get a wage rise- even if it is just in line with inflation will end up paying more income tax because they drawn into a higher tax bracket.
- Pension Lifetime allowance & Tresholds for Capital Gains Tax and Inheritance Tax will be also frozen-They’ll all stay the same until April 2026 – which again will result in some paying more tax than they would have done had the thresholds risen with inflation.
- Contactless payment limit will rise to £100-That’s up from £45 and officially takes effect from today, though in practice it will take longer for retailers to implement the increased limit.
- Alcohol and fuel duty will be frozen-This is the second year in a row that alcohol duty has been frozen, while fuel duty has been frozen for over a decade.
- The 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months– It will now last until the end of September, with an interim rate of 12.5% for another six months after that.
- A new Restart Grant will launch in April to help businesses- These will be available in England and will be worth up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
- A Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million– This will launch on 6 April and will be open to all businesses, including those who have already received support under the existing coronavirus guaranteed loan schemes.
- Some air passenger duty rates will increase from April 2022-Air passenger duty is the tax charged on outbound flights – you don’t pay it directly but it’s part of the overall fare you pay. Long-haul air passenger duty rates will increase in line with the retail prices index (RPI) measure of inflation – for economy flights that means a £2 rise, for premium economy, business and first class flight a £5 rise. There is no rise for short-haul economy flights but those travelling long-haul by private jets will see the rate increase by £13.
A no-interest loans scheme will be piloted. The Government will provide up to £3.8 million of funding to deliver a pilot no-interest loans scheme. The scheme will help vulnerable consumers who would benefit from affordable short-term credit to meet unexpected costs, as an alternative to relying on high-cost credit.