FTI Consulting Public Affairs Snapshot – Budget 2021: Green Shoots of Recovery?
Download a PDF of this articleToday, Chancellor Rishi Sunak stood up to give his second Budget.
Given the number of fiscal interventions he has made over the last 12 months – providing more than £280bn worth of support – one could be forgiven for assuming it was his fourth or fifth. With the good news on vaccinations – and the Government’s roadmap out of lockdown – this could be seen as the first major announcement of the post-pandemic era. Whilst the Government will be continuing to support the economy for some time to come, today’s statement from the Chancellor was intended to signal how the UK economy will move on from the current crisis and how the public finances will be stabilised. The lead up to the Budget was dominated by a debate on how soon to begin efforts to tackle the deficit and whether tax rises would choke off growth. In the end, Sunak opted for a middle path which signalled his intent and outlined future budget-balancing measures but avoided tax rises in the short term.
Key Announcements
- The Furlough scheme has been extended until the end of September, with a graduated tail off in payments.
- The Self-Employment Income Support Scheme is also extended on existing terms.
- The Universal Credit uplift of £20/ month will be extended from March to the end of September.
- The National living wage will increase to £8.91 from April.
- Business rates relief will be extended through to the end of June and discounted beyond.
- A £5bn “restart grant” scheme for High Streets has been launched.
- The Stamp Duty holiday is extended until 30th
- The “help to buy” scheme is being re-introduced.
- Arts venues will receive a further £400m of financial support, the sports sector £300m.
- Fuel and alcohol duty is frozen.
- Personal tax thresholds will be frozen and, following a 2022 increase, will be maintained until April 2026.
- Corporation tax will increase from 19% to 25% from April 2023.
- The basic rate of income tax will rise to £12,570 next year, and the higher-rate threshold to £50,270.
- The VAT registration threshold will remain at £85,000 until 2024.
- There will no increase on national insurance, VAT or income tax rates.
- A new ‘Super-Deduction’ will mean investment carries a 130% rate of relief.
- £22bn for a new infrastructure bank, to invest in public and private green projects.
- A sovereign green savings bond to invest in areas such as offshore wind and green energy crops.
- A “Help to Grow” scheme to provide £520m of online management courses for small businesses.
- A “fast track” visa scheme to simplify visa processes to help start-ups and tech firms sourcing foreign talent.
- A funding increase of £1.2bn for Scotland, £740m for Wales and £410m for Northern Ireland.
- Freeports launched at East Midlands Airport, Humber, Plymouth, Solent, Thames, Teeside, Felixstowe and Harwich
- A ‘Future Fund: Breakthrough’ R&D fund matching.
