Budget Summary March 2021

I sometimes wonder whether the senior members of this government get bored with telling us things we have already been told. The process of leaking every announcement so that we read about it in the morning of an announcement certainly spoils the theatre of the event.

So, you may find that even if you didn't pay attention to the Chancellor's Budget today, you already know much of this, but for everyone who would value a quick summary, here goes...

Laying out the context for the rest of his statement, the Chancellor described the state of the economy and public finances. The statistics are grim but perhaps not as grim as many of us expected:

• In 2020, the UK economy shrank by 10%.
• Since the pandemic began, 700,000 people have lost their jobs.
• Unemployment is forecast to reach 6.5% next year (11.9% previously predicted).
• With projected annual growth of 4% this year, the economy is forecast to rebound in 2021.
• We see a return to pre-Covid levels by middle of 2022, with growth of 7.3% next year.
• UK to borrow a peacetime record of £355bn this year.
• In 2021/22, borrowing will total £234bn

The Chancellor then described his 3-point response:

1. Continue doing whatever it takes to protect jobs and support businesses.
2. Once we are on the road to recovery, start to fix the public finances.
3. Build the future economy.

Let's see whether I can group the many measures under those headings:

Protecting jobs and supporting businesses

• Furlough extended to end of September, with government paying 80% of wages for hours that employees cannot work.
• As the lockdown ends, employers will have to contribute, paying 10% in July and 20% in August and September.
• Self-employed support also extended until the end of September.
• Self-employee grants to be widened, with 600,000 more people eligible.
• Minimum wage increased to £8.91
• Universal credit £20 uplift extended to the end of September.
• £1,000 Working Tax Credits extended until the end of September
• Stamp duty holiday up to £500,000 to be extended to end of June.
• And finally some measures that don't quite fit under this heading, but which can be grouped together as other support measures:
  • £19m for domestic violence programmes
    
  • £40m of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee
    
  • £10m to support armed forces veterans with mental health needs
    
  • £1.65bn to support the UK's vaccination rollout

Fixing the public finances

• Income tax, national insurance and VAT rates to remain unchanged.
• Instead, tax thresholds will be frozen until 2026, after one more increase this year, with personal tax starting at £12,750 and higher rate income tax at £50,270.
• From April 2023, an increase in corporation tax from 19% to 25%, although the rate will be kept at 19% for smaller companies with profits of less than £50,000.
• And perhaps surprisingly, no changes to capital gains tax or to inheritance tax or lifetime pension allowance.

Building the future economy

• General tax breaks for business:
  • "Superdeduction" under which businesses will be able to deduct the costs of investment in innovation from tax bills, by 130%.
    
  • Tax breaks for firms to "unlock" £20bn worth of business investment.
    
  • Business rates holiday for firms in England to continue until June with 75% discount after that.
• Other support measures:
  • Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships.
    
  • New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas.
    
  • New UK Infrastructure Bank with £12bn in capital to be based in Leeds, aiming to fund £40bn of public and private projects.
    
  • In support of the net zero by 2050 goal, £15bn in green bonds.
    
  • £150m for community groups to take over pubs, community and sports facilities.
• Sector specific tax breaks:
  • £400m for arts venues in England, including museums and galleries.
    
  • £300m for professional sport and £25m for grassroots football.
    
  • 5% VAT rate for hospitality firms to continue until September.
    
  • £5bn in Restart grants for shops and other businesses.
    
  • £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.
    
• Regional financing:
  • New funding for regional governments: £1.2bn Scotland, £740m for Wales and £410m for Northern Ireland.
    
  • New Treasury campus on Darlington with 750 UK civil servants.
    
  • £1bn Towns Fund fund to promote regeneration in 45 English towns.
    
  • First 8 sites for "Freeports" in England
    

So, there you go. Some of my categorization may be a bit tortuous, but you can't argue that there was plenty there. Over the next few days, we will start to be able to gauge the public reaction.

Alan Nelson is an author for accountingcpd. You can see his courses here.