Chancellor Rishi Sunak has delivered his 2021 Budget, offering continued support for businesses and employees throughout the summer in the wake of the pandemic, and propping up the housing market. Article by Nick Green.
The Chancellor’s 2021 Budget focused on continued support as the UK moves towards what is hoped to be the end of the Covid pandemic this year. Homebuyers, businesses, employees and the self-employed are among those who should continue to benefit from these measures, though Sunak warned that businesses should prepare for a corporation tax rise – even if this won’t kick in until 2023.
Here are the main measures in summary.
Furlough to be extended
The Coronavirus Job Retention Scheme, known as furlough, will continue to be in place until the end of September. This means it will run for three months beyond what is expected to be the end of lockdown measures (at the end of June), to allow businesses time to rebuild their finances and hopefully take employees back on full wage.
Employees unable to work their full hours can claim up to 80% of the wage they would ordinarily receive, for the hours they don’t work, up to a maximum of £2,500 per month. Employers will have to pay at least 10% of furloughed employees’ wages in July, and then 20% throughout August and September
Self-employed furlough (SEISS) also extended
The self-employed equivalent of the furlough scheme is the Self-employed Income Support Scheme (SEISS). The Chancellor has extended this scheme to those newly self-employed, meaning that over 600,000 people can now claim a SEISS grant. The scheme is now open to those who filed their first self-employed tax return in 2019/20 or before.
Derek Cribb, CEO of IPSE, said: ‘This support will be a tremendous relief to hundreds of thousands of self-employed people who could not access SEISS because they had not yet filed a full tax return. We are delighted that the government has heeded our calls to get support to this struggling group. It is also very welcome that the Chancellor will be introducing a fifth SEISS grant for the UK’s self-employed.’
95% mortgages return
First-time buyers and existing buyers alike will find more 95% mortgages available, thanks to government guarantees to lenders. Buyers will need as little as 5% deposit or equity to get a mortgage. Find out more about the return of 95% mortgages.
Stamp duty holiday extended again
Another extension has been added to the stamp duty land tax holiday, which will now finish at the end of June. After this, there will be a further stamp duty holiday on homes worth £250,000 or less, for another three months. After this, the system will return to normal, with stamp duty starting at £300,001 for first-time buyers and £125,000 for everyone else.
Tom Brown, Managing Director of Real Estate at Ingenious, said: ‘The Chancellor’s decision to extend the Stamp Duty Land Tax (SDLT) holiday and provide a Government-backed guarantee to mortgages with deposits of just five per cent reflect the importance of maintaining optimism in the UK housing market.’
New grant scheme for businesses as they reopen
There is a new £5 billion grant scheme for businesses, called ‘restart grants’, worth up to £18,000 per firm (but just £6,000 for most non-essential businesses). These will be available from April via local authorities. However, this scheme will replace the current CBILS and Bounce Back loan schemes.
Business rates holiday extended
The retail, hospitality and leisure sectors will continue to be exempt from business rates until the end of June, with a further two-thirds discount applying for the remaining nine months of the 2021/22 tax year.
Reduced VAT also extended for certain sectors
The hospitality and tourism sectors will also continue to benefit from a reduced rate of VAT (of 5%) until the end of September. After that they will pay only 12.5% VAT until April 2022, when the rate will revert to the standard 20%.
Warning of corporation tax rise to come
The 2021 Budget wasn’t all generosity. Recognising that the huge levels of state support would need to be paid for eventually, Rishi Sunak announced that corporation tax would rise from 19% to 25% in April 2023. However, the smallest 1.5 million companies will continue to pay it at 19%.
Commenting on the Budget, Charlie White-Thomson, CEO of Saxo Markets, said: ‘The Chancellor managed to combine to good effect a very difficult message of “Whatever it takes”, with the importance of rebuilding the country’s finances. This, as he rightly pointed out, will have to be managed by generations to come. In general, I believe he provided a good dose of optimism which will be a key foundation of the road to recovery.’
To find out how these measures may affect you and your business, talk to an accountant.