+++Budget Live Blog+++

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State of finances update

  • 700,000 have lost their jobs
  • Economy shrunk by 10%
  • Borrowing highest its been outside of wartime
  • OBR now forecasting a “swifter and more sustained recovery” than expected in Nov – 6 months quicker return to ‘normal’ than predicted
    • 2021: 4% growth
    • 2022: 7.3%
  • Unemployment at 6.5% – lower than 11% predicted (1.8 million)

Step 1 – protecting jobs and livelihoods

  • Furlough scheme extended to end of September at 80% until the scheme ends
    • From July, businesses will contribute 10%
    • 20% from August and September
  • Self-employed to get to more grants up to 80%
  • “Fair to target support most affected by pandemic” – those with 30% lower turn over will get the full grant, less than such a fall will receive a 30% grant
  • Self-imployed scheme extended to newly self-employed people who registered a tax return in 2019-20
    • An increase of 600,000 eligible
    • £33bn support provided to self-employed
  • Low-income households will receive the £20 per week UC boost for an extra 6 months with a one-off payment of £500.
  • National living wage rise to £8.91 from April
  • Doubling of incentive payment to £3000 for every new apprentice hire, £126m to triple the number of traineeships
  • Extra £19m for domestic abuse support
  • Extra £10m for veterans with mental health conditions
  • Businesses will receive a new restart grant in April to get businesses re-open, retail up to £6000 per premises for retail. Hospitality and gyms will get up to £18,000 when they re-open
  • £700m to support arts, culture and sporting institutions
  • New recover loans to replace bounceback loans scheme, businesses can apply for loans from between £25,000 up to £10m
  • Business rates holiday will continue through to the end of June
    • Remaining nine months will be discounted by 2/3rds
    • £6bn tax cut for business
  • 5% reduced rate of VAT extended for 6 months to end of September, 12.5% for the next 6 months. 20% will resume next April.

Housing

  • New mortgage guarantee. Lenders who provide mortgages to home buyers who can only afford a 5% deposit, will benefit from a government guarantee on those mortgages.
    • Up to home values of £600,000
    • Lloyds, Santander, Barclays and HSBC will be offering the guarantees from next month

TOTAL NEW COST: An extra £65billion measures just announced over 2021 and 2022

Step 2 – Dealing with spending

  • Borrowing predicted to fall to 4.5% of GDP next year
  • Underlying debt rises to 93% next year, peaking at 97.1% in 2023/24
  • Need fiscal freedom for future crises, so must deal with this debt now

2 new measures:

  • Not going to raise the rates of Income Tax, NI or VAT
  • Freezing of personal tax thresholds from 2022 to 2026
    • Both the lower and £50,000 rates
  • Inheritance tax, pensions lifetimes allowance, capital gains tax and VAT registration threshold also frozen
  • Tackling fraud with £100m to set up a new 1000-strong HMRC avoidance and evasion taskforce
  • Corporation tax in 2023 paid in profits will increase to 25%
    • Won’t take effect until April 2023
    • “Any struggling business will, by definition, be unaffected”
    • £50,000 or less profits will be taxed at the current rate of 19%
    • Around 70% of companies will be completely unaffected
    • £250,000 and over only will be taxed at the 25% rate, the in-between will be tapered
  • Tax treatment of losses to become more generous, allowing businesses to carry back losses of up to £2m by up to three years
  • Alcohol duties frozen for a second year in a row
  • Fuel duty rise cancelled

Rabbit out of hat:

  • The super deduction
    • Next 2 years when companies invest they can reduce their tax bill by 130% of the cost
    • E.g. a construction firm buying £10m of equipment could reduce their tax bill by £2.6m. With the super deduction, they can now reduce it by £13m

Stage 3 – building a better economy:

  • First-ever UK infrastructure bank, based in Leeds
    • Beginning this Spring it will start with £12bn capital
  • Off-shore wind
    • New port infrastructure in Teesside and Humberside
  • All UK savers will get the chance to support green projects
  • UK productivity will be addressed via “Help to Grow”
    • Tens of thousands of business will be able to get management training
    • Government contributing 90% of costs
    • Help to Grow Digital – Small business will develop digital skills and a 50% discount on new productivity-enhancing software. Beginning in Autumn.
  • Two new consultations on R&D tax relief and incentives
    • New visa reforms aimed at highly skilled migrants in STEM, and entrepreneurs
  • Protecting the union:
    • Majority of today’s budget measures will apply directly to people in all 4 countries
    • 4 new Scottish specific projects, 3 in Wales and the New Deal for Northern Ireland
    • Barnett formula increase £1.2bn in Scotland, £740m in Wales, £410m in NI
  • New Treasury Darlington campus announced
  • New Freeport announcement, launching in Teesside, East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent and Thames
    • With simpler planning
    • Cheaper customs
    • Tax breaks to encourage construction and private investment

-ENDS-

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mdi-account-multiple-outline Rishi Sunak
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