Budget 2021 Summary

Furlough

Furlough scheme extended until end of September 21. Employees will continue to receive 80% of their wages until the scheme ends, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out.

The 4th SEISS for self-employed businesses has been confirmed and will cover February to April 21, worth 80% of average trading profits up to £7,500.

There will be a 5th SEISS grant from May to September 21.

Corporation tax

The rate of corporation tax on company profits above £250,000 will increase from current 19% to 25% in April 2023. The rate will remain at 19% for smaller companies with profits below £50,000.

Firms will be able deduct investment costs from tax bills, reducing taxable profits by 130%. This means firms can cut their taxes by up to 25p for every pound they invest.

The trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.

Economic support for businesses

  • From 6 April 2021 new Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
  • Reduced VAT for hospitality, accommodation, and attractions until the end of September 2021. Interim 12.5% rate will then apply for the following six months before returning to the standard rate from April 2022.
  • Business rates relief for hospitality, retail, and leisure until the end of June 2021 in England, with 75% discount thereafter
  • £5bn in Restart grants for shops and other businesses in England forced to close. £6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
  • Incentives for firms to take on apprentices to rise to £3,000 and £126m for traineeships.

Other

  • Personal allowance will remain at £12,750 until 2026. The higher-rate threshold will increase to £50,270 next year, and remain at that level.
  • Minimum wage to increase to £8.91 an hour from April.
  • The £20-a-week increase in universal credit is extended for six months.
  • Inheritance tax thresholds, pensions lifetime allowances and annual capital gains tax exemptions to be frozen at 2020-2021 levels until 2025-26
  • Stamp duty holiday on properties up to £500,000 continues until the end of June. It will be kept at double its standard level until the end of September, and then return to usual levels from 1 October.
  • a mortgage guarantee to help first-time buyers access 95% mortgages.