In a much-anticipated Budget, Rishi Sunak finally confirmed his plans for rebuilding the economy, supporting business and the inevitable tax rises today.
Here, MJB Avanti look at the key points effecting you. We have more detailed information available via our APP.
We will be examining the measures in more detail in the coming days and weeks via our social media channels.
An Overview Of Our Economy
The Coronavirus pandemic has left its mark on the economy which shrank by 10% in 2020 but prospects are good with forecasters projecting growth of 4% this year and a return to pre-Covid levels by the middle of 2022. This year has seen the UK borrow an eye watering £355bn, which has been confirmed as a peacetime record, and highlights the level of support provided.
Personal & Business Taxation
In a positive move, there will be no increase to rates of income tax, national insurance or VAT, the personal income tax allowance remains frozen at £12,570 from April 2022 – April 2026. Higher rate income taxpayers can also expect a freeze at £50,270 for the same period.
The Chancellor will say that the Government continue to abide by their election promise to not raise tax rates but may be criticised for an increase in tax by stealth.
Also remaining unchanged are:
- Inheritance Tax
- Lifetime Pension allowances
- Capital Gains Tax allowances
Good news for house buyers, the property market will continue to be buoyed by the extension of the stamp duty holiday, with no tax liability on purchases up to £500,000.
Business Owners will feel the squeeze as Corporation tax on Company profits rises from 19% to 25% in April 2023, but those smaller Companies with profits less than £50,000 of which there are estimated to be 1.5million can expect the 19% Corporation Tax rate to be frozen.
It goes against the grain for a Conservative Government to raise corporation tax having consistently reduced rates for so many years. The argument is that those larger companies are making more substantial profits and should contribute more to a recovery.
The minimum wage rate will be increased to £8.91 per hour from April.
Coronavirus Support
Predicted and widely announced yesterday, the Furlough scheme is extended to September 2021 with employers being asked to make an increasing contribution of 10% commencing in July, and 20% in August and September.
This is especially welcome and extends beyond when lockdown measures are being relaxed.
The support for the self-employed has also been extended to September 2021, with a further 600,000 self-employed people to be eligible for grants.
Universal Credit will be increased by £20 per week for a further six months and working tax credit claimants will receive a one-off £500 payment.
Keen to support those businesses at the sharp end of this crisis, the Chancellor announced targeted support.
Businesses will be encouraged to take investment on board with £20bn on offer and tax breaks promised, with an ability to ‘deduct’ investment costs and reduce taxable profits by 130%
Non-essential outlets due to open in April can expect to receive £6,000 per premise while gyms, personal care providers and other hospitality and leisure businesses will receive £18,000.
The business rates holidays will continue until June with a 75% reduction after that.
A pledge of £5bn restart grants for retail and other businesses forced to close.
The reduced VAT rate for hospitality will remain until September, with a 12.5% rate applying for a period of 6 months after that.
General
The announcement of a £1bn Towns Fund to promote the regeneration of 45 English towns will be welcome in some of the Countries most affected areas.
£150m for Community groups to save pubs at risk of closure.
Arts venues including museums and galleries will receive £400m to help them re-open.
Professional sports will receive a £300m recovery package.
Alcohol, tobacco and fuel rates all remain unchanged.
The Chancellor emphasised that this is a budget to support and recover, with the opposition claiming that it papers over the cracks. Only time will tell if the pledges of support are enough or whether they are too little, too late.
Please contact us (08000) 388 799 should you wish to discuss how these measures impact you personally, or your business.