In a Budget which ‘meets the moment’, the Chancellor of the Exchequer Rishi Sunak has (3 March) set out a £65 billion three-point plan to provide support for jobs and businesses as we emerge from the pandemic and forge a path to recovery.
Chancellor’s three-point plan to support businesses and families, investments and to strengthen public finances.
Chancellor of the Exchequer Rishi Sunak said his immediate priority continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts – bringing total fiscal support to over £407 billion. He also set out plans to drive jobs, growth and investment to help the economy rebound – and spoke honestly about the tough choices required to put the public finances on a more sustainable path.
Delivering the budget in Parliament Chancellor of the Exchequer Rishi Sunak said:
“This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people. First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”
Here are the main points:
Protecting jobs and livelihoods
- the Coronavirus Job Retention Scheme will be extended to September and the Self-Employment Income Support Scheme (SEISS) will continue with a fourth and a fifth grant.
- In addition, the business rates holiday in England has been extended by an additional three months.
- To continue supporting the 150,000 businesses in the tourism and hospitality sectors and to protect 2.4 million jobs, the government has extended the temporary 5% reduced rate of VAT until 30 September 2021.
- Grant funding will be available to businesses in England through a new £5 billion Restart Grant scheme to help the high street
- A new Recovery Loan Scheme will also be launched to replace the existing government guaranteed schemes
- To maintain momentum for the Covid-19 vaccination programme, the Budget will inject an extra £1.65 billion
- the Chancellor is increasing support with £126 million of new money to enable 40,000 more traineeships, and doubling the cash incentive to firms who take on an apprentice to a £3,000 payment per hire. The National Living Wage will be increased to £8.91 from April
- A new mortgage guarantee scheme will enable homebuyers to secure a mortgage up to £600,000 with a 5% deposit
- £700 million will support the UK’s arts, culture and sporting institutions
- Fuel duty will be frozen for the 11th consecutive year
Strengthening the public finances
Income tax personal allowance and the higher rate threshold will rise next year as planned and will then be maintained at that level until April 2026. Nobody’s take home pay will be less than it is now, and the UK’s allowances remain the most generous of any G20 country.
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 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%.
An investment-led recovery
- New English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside and will be special economic zones with different rules to make it easier and cheaper to do business.
- The Budget also coincides with the publication of the the government’s new Build Back Better: our plan for growth strategy, setting out how infrastructure, skills and innovation will drive the UK economy.
- 130,000 small and medium sized businesses will be supported through the new Help to Grow scheme, providing the digital and management tools needed to innovate, grow and help drive recovery.
- Beginning April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130% of the cost.
- new port infrastructure will be built to support the next generation of offshore wind projects in Teesside and Humberside. The UK will issue at least £15 billion in green bonds to help finance the transition to net zero and the government will launch the world’s first sovereign green savings bond for retail investors.