Presenting the UK Budget 2021, Chancellor of Exchequer Rishi Sunak announced to extend the Furlough scheme until September. Sunak also announced the government’s plans to hike tax on large company profits from 2023 onwards.
However, the chancellor maintained that rates of VAT and National Insurance will remain the same. However, Sunak added that government will make all-out efforts to include more people into the tax bracket.
The chancellor reiterated the government’s resolve that they will leave no stone unturned to support businesses and people in what apparently seems like the last stage of the pandemic.
But Mr. Sunak warned that repairing the long-term damage “will take time”.
Despite the £280bn of support already committed to protecting the economy the damage done by coronavirus has been “acute,” he told MPs.
“Our economy has shrunk by 10{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} – the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime.
“It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation. But we will recover.”
He set out measures aimed at creating jobs and preventing businesses from going under as emergency support is withdrawn over the coming months.
He extended the furlough scheme to September, paying up to 80{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} of people’s wages – and announced that 600,000 more self-employed people will become eligible for government help, as access to grants is widened.
He also extended the £20-a-week top-up to universal credit for six months.
UK Budget 2021: Key points at-a-glance
- An increase the limit on contactless payments from £45 to £100
- The location of eight “freeports” in England, with “cheaper customs – with favourable tariffs, VAT or duties”
- £5bn to help High Street firms reopen
- The return of 95{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} mortgages backed by the government scheme to aid first-time buyers
- £408m for museums, theatres and galleries in England to help them reopen when Covid restrictions ease
- £150m to help communities take over pubs in danger of closing
- £300m summer sports recovery package
- All alcohol duties will be frozen, which Mr Sunak said would help pubs and restaurants recover, and there will be no increase in fuel duty.
- The reduced 5{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} VAT for the hospitality and tourism sector will be extended for six months to 30 September, and will not return to the full standard rate of 20{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} until April next year.
- The chancellor also began the process of balancing the UK’s books.
- The headline rate of corporation tax will go up from 19{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} to 25{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} in 2023, with an exemption for smaller businesses.
- This will eventually raise £17bn a year, according to Treasury forecasts.
- And a freeze on income tax thresholds is set to raise £7bn a year.
- Mr Sunak also announced that 750 civil service jobs at the Treasury will be transferred to Darlington, in the north-east of England, as part of the government’s plan to move decision-making out of London.
