The Chancellor delivered today's 2021 Budget with the objective of protecting the economy, protecting jobs, supporting income and planning for post-pandemic recovery and growth.
To begin, we have updated all our tools and calculators for the 2021/2022 tax year, rates and allowances as well as support scheme calculators.
Tax
Tax rates and allowances for 2021 have not been drastically altered, for now, with the government choosing to use the effect of fiscal drag to replenish the Treasury. This means most tax thresholds and allowances will be frozen at 2021 levels for the foreseeable future with the main tax rise occurring to the main rate of corporation tax in 2023. The rate will rise to 25% but small companies will be protected with the return of the small company's rate at 19%.
Duty increases across the board have been cancelled and duties remain frozen at previous levels.
Economy
The combined effect of the pandemic response and vaccinations mean the economy is expected to bounce back earlier than expected, around the middle of 2022. In the meantime unemployment will peak at 6.5 percent and GDP falls to 4 percent. Borrowing continues to soar at nearly a fifth of the country's income and debt to hit the same level as GDP in two years.
Such worrying figures require support for the economy to grow and there are new schemes such as the recovery loan scheme to allow enterprise to develop with the government acting as an 80 percent loan guarantor.
Losses incurred by businesses can now be offset against profits going back three years. A super-deduction has been announced as a first-year capital allowance to encourage investment - a 130 percent offset against profits for tax purposes for businesses on qualifying plant and machinery assets.
The business rate holiday continues for businesses until the end of June and will remain discounted to some level until April 2022. £5 billion in new grants to be awarded to help businesses as they reopen.
Reduced 5 percent VAT for hospitality, leisure and tourism sector companies extends to the end of September, after that it tapers to 12.5 percent and returns to 20 percent in the 2022 tax year.
Income Support
The Furlough Scheme has been extended to the end of September 2021, with 70 percent government support from July and 60 percent support from August. We have updated our Furlough Calculator to allow a quick estimate for any period of furlough since it was first announced.
Self employed people will have a fourth and fifth SEISS grant, with the next grant coming in April covering the three months from February 2021. Our SEISS calculator for the fourth installment has been updated. Claims now include 2019/2020 data and will allow many more people to claim.
The fifth SEISS grant is coming in September, with a new caveat of the payout being based on the how badly affected business has been by the pandemic. A lower payout for those with a less than a 30 percent drop in turnover in the last year. Find out how much your fifth SEISS grant will be using our new calculator.
Universal credit claimants will continue to receive an extra £20 per week for another six months and working tax credit claimants will get a one-off £500 additional support payment.
Property
The stamp duty holiday has been extended to the end of June, so no stamp duty for transactions up to £500,000, with a tapered period following until September where there is no stamp duty on transactions of up to £250,000. Use our Stamp Duty Calculator to see how the changes affect the amount of tax.
The government will support 95 percent mortgages with many lenders already braced to offer the products from next week. Homebuyers will only need a 5 percent deposit with the government acting as guarantor on the mortgage.