On Wednesday 3rd March, the Chancellor Rishi Sunak delivered his Spring Budget. Acknowledging the devastating impact that the pandemic has had on our way of life, with the economy having shrunk 10%, he reaffirmed his promise to whatever it takes to protect as many jobs businesses and families as possible. Here is a snapshot breakdown of the key points:
Housing
- The Chancellor has unveiled a mortgage guarantee scheme to help homebuyers purchase property with small deposits. Under the scheme, the Government will offer lenders a guarantee, incentivising them to boost the number of riskier 95pc mortgages.
- The Chancellor also announced a three-month extension to the stamp duty holiday for properties under £500,000. The holiday for properties worth less than £250,000 will apply until the end of September.
- Investors breathed a sigh of relief as a predicted hike in capital gains tax did not become reality but experts believe this is yet to come.
Jobs
- The furlough scheme has been extended until the end of September. Furloughed employees will receive 80pc of their salary but businesses will be asked to contribute to their wages from the end of July as the recovery gathers pace.
- Self-employed workers will be able claim a fourth grant from the Self-Employed Income Support Scheme worth 80pc of three months’ trading profits at up to £7,500. The newly self-employed in the 2019-20 financial year will now also be able to receive the payments. A fifth grant will also be available.
- The Treasury has also already confirmed extra funding for apprenticeships with a cash incentive to take on apprentices boosted by £1,000 to £3,000 per hire.
- The Chancellor has extended the £20 boost to weekly Universal Credit payments for a further six months.
Taxes
- Corporation tax will rise from 19pc to 25pc in April 2023 but Mr Sunak said the UK will still have the lowest rate in the G7.
- A "small profits rate" will be introduced for firms with profits under £50,000, meaning small firms will still enjoy the lower 19pc corporation tax rate. Only 10pc of companies will pay the full higher rate, the Chancellor said.
- Mr Sunak also announced a "super deduction" - a tax relief to spur business investment. When companies invest they can reduce their tax bill by 130pc of the cost of the investment.
- The Chancellor said income tax thresholds will be frozen until 2026 after next year's planned increases.
- All alcohol duties and the fuel duty were frozen.
Saving Covid-hit sectors
- Businesses will be able access a new "Recovery loan scheme" to replace the Bounce Back and coronavirus loan schemes. 25,000 to 10m through to the end of this year with a 80pc guarantee for
- The Chancellor has unveiled a £5bn Restart Grant scheme that will provide Covid-hit firms up to £18,000 to boost their survival chances.
- The cash injection will be aimed at retail, hospitality, accommodation, leisure and personal care firms. Retailers will be able to access £6,000 per business.
- Business rates relief for the hardest hit sectors, such as retail and hospitality has been extended for three months. For the remaining nine months, business rates will be discounted by two-thirds - a £6bn tax cut for firms, Mr Sunak said.
- Hospitality and tourism firms will benefit from VAT being held at 5pc.