Protecting jobs and livelihoods of the British People - The Budget at a glance

Executive Summary

Rishi Sunak’s budget follows a year of extraordinary economic challenge as a result of the ongoing COVID-19 pandemic. Like that of many other countries, the UK’s economy has been hit hard, with both the direct effects of the virus and the measures necessary to control it leading to an unprecedented fall in output and higher unemployment.

In the face of this threat, the government acted swiftly to provide support to protect businesses, individuals and public services across the UK, adapting its economic response as the pandemic evolved. Thanks to people’s hard work and sacrifice, supported by the success of the initial stages of the vaccine rollout, there is now a path to the reopening of the economy.

The Budget sets out how the government will extend its economic support to reflect the cautious easing of social distancing rules and the reopening of the economy in the government’s roadmap.1 Support in the Budget reflects the easing of restrictions to enable the private sector to bounce back as quickly as possible.

As the economy reopens, the Budget sets out the steps the government is taking to support the recovery, ensuring the economy can build back better, with radical new incentives for business investment and help for businesses to attract the capital, ideas and talent to grow.

The following provides a snapshot of the plans place for the the future:-

• Office for Budget Responsibility (OBR) predicts economy will return to pre-Covid levels by the middle of 2022, six months earlier than previously though.

• OBR forecast economy will grow this year by 4 per cent, by 7.3 per cent in 2022, then 1.7 per cent, 1.6 per cent and 1.7 per cent up to 2025

• Unemployment now expected to peak at 6.5 per cent, down from 11.9 per cent expected in July 2020 forecast, meaning 1.8million fewer people out of work.

• Furlough scheme extended to the end of September under current 80 per cent of salary rate.

• Employers asked to pay 10 per cent in July, then 20 per cent in August and September.

• Support for self-employed also goes on until September.

• £20 Universal Credit uplift remains in place for another six months.

• Apprentice grants for employers doubled to £3,000.

• £5billion fund for Restart Grants for businesses. Retailers will get up to £6,000 per site from April. Hospitality and leisure open later and will be able to claim up to £18,000.

• New recovery loan scheme for businesses of £25,000 to £10million, 80 per cent guaranteed by the Government.

• Business rate holiday in place until June and discounted for the remaining nine months of 2021-22 financial year.

• 5 per cent VAT rate for hospitality extended to September, then at 12.5 per cent until April 2022 before returning to 20 per cent regular rate.

• Stamp Duty holiday extended until June for homes worth up to £500,000, then phased back in.

• Mortgage guarantee scheme for those with 5% deposit to boost home sales.

• UK's total public spending bill estimated at £407billion.

• The UK has borrowed £355billion - 17 per cent of GDP - the highest since the Second World War.

• No income tax, VAT or national insurance rises.

• Tax free income threshold will rise to £12,570 next year and then frozen until 2026.

• Higher rate threshold rises to £50,270 next year and then frozen until 2026.

• Corporation Tax increased to 25 per cent in 2023.

• Small Profit Rate of 19 per cent set up for small businesses.

• Inheritance tax thresholds, pensions lifetime allowance, and annual exempt amount in capital gains tax maintained at current levels until April 2026.

• Alcohol duty frozen.

• Fuel duty frozen.

For further information - H M Treasury