Your personal finances
The personal allowance and income tax thresholds for basic and higher-rate taxpayers will rise in April and then be frozen until 2026 – increasing their tax as earnings rise. Income tax rates and thresholds are set in a different way in Scotland and Wales. The inheritance tax nil rate band, the capital gains and pension lifetime allowance remain unchanged until April 2026. Anyone with a total pension value above £1,073,100 may face additional charges. ISA limits remain unchanged.
Duty on spirits, wine, beer, and cider remains frozen for the 2021/22 financial year, which benefits brewers and distillers but not individual pubs, bars, and restaurants.
The chancellor has not raised duty on petrol and diesel: which has been frozen for more than a decade.
An extra £1.65bn is to be injected into the vaccination programme in England, while the devolved administrations are receiving additional funding. This should mean the great progress we have made continues.
The Coronavirus Job Retention Scheme will be extended beyond its 30th April cut-off until the end of September 2021. The government will pay 80% of wages for furloughed staff until the restrictions are due to be lifted in June then: businesses will be asked to pay a further 10% of wages in July, and then 20% in August and September. Support for self-employed workers will continue until September, expanding to cover those who started working for themselves in 2019/20. But still not including the roughly 2 million small business directors who have been excluded since the start of the pandemic in 2020.
Further business support
The 5% VAT rate for the UK hospitality sector will remain until the end of September, followed by 12.5% until next April. Restart grants will be offered to businesses, such as non-essential retailers in England, grants for the hospitality sector will be welcome but need to reach the trade quickly, there were delays in the previous grants being distributed. The 0% rate on business rates will extend until the end of June and for the rest of 2021/22, rates will be discounted by two thirds, which will be particularly welcomed by the hospitality sector and tenanted pubs in particular. Further announcements are expected from Wales, Scotland, and Northern Ireland.
The chancellor stressed that the very high level of UK government borrowing throughout the pandemic and this needs to be thought about and addressed in the future as a small rise in interest rates could have a £20 billion impact, so despite borrowing costs being relatively low at the moment, there will be future increases in taxes. So far, a total of £407bn has been set aside to deal with the pandemic, and borrowing is set to hit its highest level since the Second World War, debts which were not paid off until December 2006, so it is a long-term issue.
The economy is expected to return to its pre-pandemic size by the middle of 2022. But it will be 3% smaller than would otherwise have been the case by 2025, although the chancellor said the actions that the government has taken since last March have helped. GDP is expected to grow by 4% in 2021 and then 7.3% next year, while official forecasts suggest unemployment may peak at 6.5% in 2022.
The current stamp duty 0% rate on property purchases worth up to £500,000 is being extended beyond 31 March: this will now apply until 30 June. From July until the end of September, there will be a 0% rate on the first £250,000 and, from October, the 0% band will revert to £125,000. The government has announced a new mortgage guarantee scheme for borrowers with small deposits (5%).
The rate of corporation tax on business profits will rise from its current 19% to 25% in 2023, the chancellor said that as part of the government’s efforts to pay down the national debt. There will be an exemption from this higher rate for most smaller businesses who make up our membership, however, with the 19% rate applying to annual profits up to £50,000. An incrementally higher rate will be applied to profits between £50,000 and £250,000. The Forum still feel this misses those large multinational businesses who pay hardly any tax in the UK despite doing a lot of their business here.
For the next two years, businesses will be allowed to offset 130% of their investment spending against their tax bills. With investment levels having slumped during the pandemic, the chancellor hopes this policy will help drive improvements in growth and productivity across the UK.
Stock market reforms
The Chancellor announced plans to introduce reforms to the stock market in London in an attempt to bring more fast-growing businesses into the UK. The plans will make it easier for SPACs (special purpose acquisition companies) to join the London stock market, and the reforms are seen as a way for the City to protect its status as a leading financial centre, post-Brexit.
Scotland, Wales, and Northern Ireland
The chancellor announced additional funding for the devolved administrations under the Barnett formula, with an additional £1.2bn to Scotland, £740m in Wales and £410m in Northern Ireland. The chancellor also pointed out that most of the measures he put forward would apply across the whole of the UK.