This Bulletin covers the Chancellor of the Exchequer’s UK Budget announcements, delivered on Wednesday 3rd March 2021.
This Budget – delayed from November 2020 because of the Coronavirus pandemic – sought to give clarity to continuing and extending a range of fiscal and monetary measures, designed primarily to support people and companies over the next six months. It also set out the Government’s broad-brush intentions on tax and spending for the next five years.
One very strong caveat: although the Government’s Covid-19 ‘roadmap’ has already set out their target to remove the majority of restrictions, in stages, on individuals and businesses by late June 2021, there is continuing uncertainty about the evolution of the Covid-19 virus. This means that the Chancellor’s Budget is based on what we know today; it is quite possible that he will have to vary support measures during the course of 2021 and the Government is already committed to regular reviews, particularly the dates for the easing of the five stages of lockdown measures on 8ᵗʰ March, 29ᵗʰ March, 12ᵗʰ April, 17ᵗʰ May and 21ˢᵗ June. (See Appendix 1 at the end of this document).
Continuing discussions between the UK and EU over a myriad of post-Brexit detailed trading relations and regulations may also have a bearing on potential variations to the Budget measures. Again, the UK Government says it is committed to provide support to UK citizens and companies as
required by evolving circumstances.
BUDGET CONTENT – THE MAIN POINTS
1. Covid-19 related support
- An extra £1.65 billion cash injection to ensure the Covid-19 vaccination roll-out in England continues to be a success.
- £28 million to increase the UK’s capacity for vaccine testing, support for clinical trials and improve the UK’s ability to rapidly acquire samples of new variants of Covid-19.
- £22 million for a world-leading study to test the effectiveness of combinations of different Covid-19 vaccines. This will also fund the world’s first study assessing the effectiveness of a third dose of vaccine to improve the response against current and future variants of Covid-19.
- A further £5 million on top of a previous £9 million investment in clinical-scale mRNA manufacturing, to create a ‘library’ of vaccines that will work against Covid-19 variants for possible rapid response deployment.
- Extending £500 Test and Trace support payments, for individuals who test positive in England, until the summer.
2. Employment and other support packages for individuals and businesses
- An extension of the Furlough Scheme to 30ᵗʰ September 2021 – but payments will be tapered. Until 30ᵗʰ June, furloughed employees will continue to receive up to 80% of their pay for hours not worked. From 1ˢᵗ July, the Government will contribute 70% and employers will have to pay 10% for hours not worked. In August and September, the Government will pay 60% and employers 20%.
- An extension of the UK-wide Self Employment Income Support scheme (SEISS) to 30ᵗʰ September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time. (Details here: Self-Employment Income Support Scheme fourth grant )
- An extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September to support the housing market and protect and create jobs.
- A new mortgage guarantee scheme will enable all UK homebuyers to secure a mortgage up to £600,000 with a 5% deposit.
- £5 billion for new Restart Grants – a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
- A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
- Extension of the Film & TV Production Restart scheme in the UK, with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
- Six-month extension of the £20 per week Universal Credit uplift in Great Britain, with the Northern Ireland Executive receiving additional funding to match the increase. A one-off payment of £500 to eligible Working Tax Credit claimants across the UK.
- Extension of the VAT cut to 5% for hospitality, accommodation and leisure attractions across the UK until the end of September 2021, followed by a 12.5% rate for a further six months until 31ˢᵗ March 2022.
- 750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief. (Local Councils will contact those eligible)
- Extension of the apprenticeship hiring incentive in England to September 2021 and a payment increase to £3000.
- £7 million for a new “flexi-job” apprenticeship programme in England that will enable apprentices to work with a number of employers in one sector.
- An additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.
- More than doubling the legal limit for single contactless debit and credit card payments, from £45 to £100.
- £10 million to support veterans with mental health needs across the UK.
- £19 million to tackle domestic abuse in England and Wales, with funding for a network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending.
- £90 million funding to support Government-sponsored national museums in England due to the financial impact of Covid-19.
- £300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia.
- Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
- To further support the cash-flow of businesses, the Government is extending the loss carry-back rules worth up to £760,000 per company.
- £100 million for a new Taxpayer Protection Taskforce to crack-down on Covid-19 fraudsters who have exploited UK Government support schemes.
3. Measures to support the public finances
- Maintaining the income tax Personal Allowance and higher rate threshold from April 2022 until April 2026.
- To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until Businesses with profits of £50,000 or less (around 70% of actively trading companies) will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
- Maintaining inheritance tax thresholds at their current levels until April 2026.
- Fuel duty will be frozen for the 11ᵗʰ consecutive year.
- Alcohol duties will be frozen across the board for the second year running, saving drinkers an estimated £1.7 billion.
- Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).
- Maintaining the Lifetime Allowance at its current level of £1,073,100 until April 2026.
- The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.
4. Government-led investments to support recovery
- Beginning in April 2021, the new super-deduction will cut companies’ tax bills by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
- Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
- The £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.
- Reforms to the immigration system will help ambitious UK businesses attract talented overseas (non-UK) citizens.
- A new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost.
- £2.8 million to support a UK and Ireland bid to host the 2030 World Cup and £25 million investment in UK grassroots sports (enough for around 700 new pitches).
- Launching a review of Research & Development tax reliefs to make sure the UK remains a competitive location for cutting-edge research.
- £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the Government’s aim to generate enough electricity from offshore wind to power every home by 2030.
- £68 million to fund a UK-wide competition to deliver innovative, ‘first-of-a-kind’ long- duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
- £4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.
- Publication of the Government’s ‘Build Back Better: our plan for growth’ proposals.
- Over £1 billion funding for a further 45 towns in England through the Towns Fund, supporting their long-term economic and social regeneration as well as their immediate recovery from the impacts of Covid-19.
- £28 million to fund the Queen’s Platinum Jubilee celebrations in 2022, delivering a major celebration for the UK.
- Plans for at least £15 billion of green gilt issuance in the coming financial year, to help finance critical projects to tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK.
- £150 million Community Ownership Fund will allow communities across the UK to invest to protect the assets that matter most to them such as pubs, theatres, shops, or local sports clubs.
- Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 2021-2022.
Clearly, these are big issues with very great deal of information. We have summarised all the matters that we believe are likely to fully or partly impact you/your organisation. It is possible that some individuals and organisations will want to have more background information about the Budget measures. Rather than list a host of individual links, we believe that you will find it easier and quicker to go to the HM Treasury link that lists all the Budget documents: Budget 2021: documents – but be prepared for some long reads!
Step 1 – 8ᵗʰ March
• Schools open. Outdoor after-school sports allowed
• Two people allowed to sit together outdoors
• Care home residents allowed one regular visitor
Step 2 – 29ᵗʰ March
• Six people or two households allowed to meet outdoors
• Outdoor sports facilities open; organised sport allowed
• Travel outside local area allowed
Step 3 – 12ᵗʰ April
• Non-essential retail and personal care premises open
• Outdoor hospitality venues open
• Indoor leisure (gyms, swimming pools etc.) venues open
• Self-contained holiday accommodation open
Step 4 – 17ᵗʰ May
• Outdoors – most social contact restrictions lifted
• Six people or two households can meet indoors
• Indoor hospitality and hotels open
Step 5 – 21ˢᵗ June
• All legal limits on social contact removed
Please note – All of the dates above will be subject to review, based on the Government’s four safety criteria tests:
- The vaccine programme continues to go to plan
- Evidence shows that vaccines are reducing hospitalisations and deaths
- Infection rate surges do not risk sudden rises in hospital admissions
- New and emerging Covid-19 variants/mutations do not alter the risk of lifting restrictions on
the targeted dates
We will issue further advice and guidance Bulletins as the Covid-19 situation develops.
Henry Boyle 1400 hrs 4ᵗʰ March 2021