On Wednesday 3rd March, Chancellor Rishi Sunak announced his 3-part Spring Budget.
Step 1 of the plan introduces measures to continue to support businesses and livelihoods through the ongoing crisis, with step 2 focusing on strengthening public finances, and step 3 focused on building the future economy.
Here we summarise the key announcements:
Step 1 – Support through the continuing COVID-19 crisis
A further £65billion of measures to continue to protect jobs and livelihoods through the remaining period of the COVID-19 crisis.
- The furlough scheme will be extended until September. Employees will continue to receive 80% of their salary. From July, employers will contribute 10% of wages, and 20% from August and September.
- The Self-Employed Income Support Scheme will be extended to September with a 4th and 5th grant. People who became newly self-employed in 2019-20 who filed a tax return by 2nd March will be able to claim the 4th and 5th grants.
- The Universal Credit uplift of £20 per week will continue for a further 6 months until September.
- Employers who hire new apprentices of all ages will receive £3000 of incentive payments.
- An extra £126m will be put into the traineeship scheme, in which the government pay employers who give young people work placements.
- The Stamp Duty holiday will be extended to the end of June, with the threshold remaining at £500,000. The nil rate band will reduce to £250,000 to the end of September, and will return to the usual level of £125,000 from 1st October.
- 95% mortgages will be guaranteed by the government from April.
- The business rates holiday will continue until the end of June. Rates will then be discounted by two-thirds of the normal charge, up to a maximum of £2m for closed businesses.
- The Recovery Loan Scheme will be introduced to replace the current government-backed loans that come to an end in March. Businesses of any size will be able to apply for loans of £25,000 – £10million up to the end of the year. The government will provide an 80% guarantee.
- A new Restart Grant will be introduced in April to support businesses as they reopen. Non-essential retail businesses will be able to access grants of £6,000 per premise. Retail and hospitality businesses (including personal care) will be able to access grants of £18,000 per premise.
- A further £700m will be made available to the arts, culture and sport sectors through the Film and TV Production Restart Scheme.
- The 5% reduced rate of VAT will be extended to 30th September 2021, after this there will be an interim rate of 12.5% for a further 6 months, before a return to the standard rate of 20% in April 2022.
Step 2 – Strengthening public finances
The Chancellor stated that as the government is providing businesses with over £100bn of support to get through the pandemic, “it is fair and necessary to ask businesses” to contribute to its recovery, with a number of upcoming tax changes, which include:
- National Insurance, Income Tax and VAT will not be raised.
- The personal tax threshold will be frozen after next year’s increase to £12,570 until April 2026.
- Thresholds for VAT, CGT, IHT and pensions allowance will all be frozen.
- A new HMRC taskforce for COVID-19 fraud and tax avoidance will be established.
- In 2023, corporation tax will be increased to 25%. Only businesses making profits above £250,000 or more will be taxed at the new 25% rate.
- A ‘super deduction’ will allow companies to reduce their tax bill by 130% when they invest in new equipment.
Step 3 – Building the future economy
The Chancellor also announced a number of measures to start an investment-led recovery as part of his Spring Budget, which include:
- Reforms to the immigration system, and a ‘fast-track’ visa scheme to help start-up and rapidly growing tech firms source talent from overseas.
- A ‘Help to Grow’ Scheme will offer thousands of small businesses free digital and management training.
- An ‘investment in green’: funding for UK-wide competitions to develop floating offshore wind demonstrators and long-duration energy storage prototypes.
- A review into Research & Development tax reliefs.
We will provide a comprehensive summary of the Spring Budget in the coming days. In the meantime, if you have any questions or would like further advice, please do not hesitate to get in touch and we will be happy to help.