The Spring Budget At A Glance
It was no surprise that the chancellor’s Budget statement focused on plans for the government to continue to support the UK’s pandemic-damaged economy.
Through measures such as freezing future personal allowances, exemptions and thresholds, the chancellor has begun the process of raising revenue, without breaking the government’s manifesto pledge on certain tax rates.
The government will not raise national insurance, income tax or VAT, but will freeze a number of existing thresholds from April 2021.
The income tax personal allowance will rise from £12,500 to £12,750 from April 2021 and remain at that level until 2026.
The higher-rate threshold will increase slightly from £50,000 to £50,270 and also remain at that level until 2026.
The inheritance tax nil rate band will remain at £325,000 per person.
The pensions lifetime allowance will remain at £1,073,100 per person.
The annual exempt allowance from capital gains tax will remain at £12,300 per person.
The VAT exemption threshold of £85,000 will also be frozen.
The current stamp duty holiday will be extended. This means that no stamp duty will be due for properties up to £500,000 until the end of June 2021. This will then be lowered to £250,000 until the end of September, before returning to its usual level of £125,000 from 1st October.
There will be a mortgage guarantee to help first-time buyers access 95% mortgages. Several UK lenders including HSBC, Santander, Lloyds, NatWest and Barclays will offer the 95% mortgages from next month, with more to follow after that.
The furlough scheme is being extended until the end of September. Employees will continue to receive 80% of their wages up to £2,500 per month until the scheme ends. However, firms will be asked to make a contribution of 10% in July and 20% in August and September as the scheme is phased out.
The self-employment income support scheme (SEISS) has been extended. The fourth grant will cover February to April, worth 80% of average trading profits up to £7,500. A fifth grant will be made available from May, which will be claimable from July.
The SEISS is widened (for the 4th and 5th grants) to include those who became self-employed in the tax year 2019/20, provided they filed a tax return by 2nd March 2021
There are a number of announcements aimed at businesses to help them transition back to normal trading conditions.
There will be a £5 billion restart grant for businesses to help companies get going after lockdown.
There will be a doubling of the apprentice incentive payments given to businesses to £3,000. This applies to new hires of any age.
The Treasury is launching a new loan scheme to run until the end of the year to replace the bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS). Loans will be between £25,000 and £10m. As with CBILS, 80% of these loans will be guaranteed by the government, reducing the risk to lenders.
Businesses within the hospitality and leisure industry will pay no business rates for three months. Rates will then be reduced for the remaining nine months of the tax year by two-thirds.
The 5% reduced rate of VAT for the hospitality industry will be extended until the end of September. This will be gradually increased, at 12.5% for six months, before returning to the standard rate of 20% from April 2022.
From April 2023, the rate of corporation tax will increase to 25% from its current rate of 19%. This may be of concern for SME business owners, however, only businesses with profits of more than £250,000 will be taxed at the full 25% rate. The tax rate will be tapered depending on the profitability of the company, so those with profits of less than £50,000 will continue paying corporation tax at 19%.
The government is investing £25bn by allowing a 130% super-deduction on tax for investments made by companies, such as investing in new plant and machinery. This means firms can cut their taxes by up to 25p for every pound they invest.
There will be a new 3-year carry back period for any losses the business makes in a tax year. This means that companies who were previously profitable, but made a loss this year, will be able to claim a refund on corporation tax they’ve paid in the last three years.
A new national infrastructure bank will open in Leeds with an initial £12bn capitalisation from the government.
Green projects will be supported through a green recovery bond.