What did Rishi Sunak say in his Budget 2021? Key points explained

Rishi Sunak has set out plans to freeze income tax thresholds and increase corporation tax as he begins the process of repairing the nation’s finances following the coronavirus crisis.

The Chancellor also used his Budget to set out a £65 billion spending package this year and next year to support the economy as it recovers from the pandemic.

Here are the key points from his 51-minute House of Commons address:

The economy

– The Chancellor said coronavirus has caused one of the “largest, most comprehensive and sustained economic shocks this country has ever faced”.

– Borrowing is forecast to be £234 billion next year – 10.3% of gross domestic product (GDP), a measure of the size of the economy – but will fall to 4.5% of GDP in 2022-23, 3.5% in 2023-24, then 2.9% and 2.8% in the following two years.

– The measures to support the economy amounted to £65 billion over this year and next, taking the total Government support to £407 billion over that period, Mr Sunak said.

BRITAIN-POLITICS-BUDGET-ECONOMY
Rates of income tax, national insurance and VAT kept at the same level but personal tax thresholds will be frozen from April 2026.
PRU/AFP via Getty Images

Coronavirus support

– The furlough scheme will be extended to the end of September, as will support for the self-employed.

– The Universal Credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown.

– A new restart grant will start in April to help businesses reopen, with £5 billion of funding.

– The Chancellor confirmed an additional £1.6 billion for the coronavirus vaccine rollout and to “improve future preparedness”.

– The business rates holiday for the retail, hospitality and leisure sectors will continue until the end of June, and will be discounted by two thirds for the remaining nine months of the year.

– The 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months to the end of September, with an interim rate of 12.5% for another six months after that.

– The stamp duty cut will continue until the end of June, with the nil rate band set at £250,000 – double its standard level – until the end of September.

A new restart grant will start in April to help businesses reopen, with £5 billion of funding.
AFP via Getty Images

Taxation

– The rate of corporation tax, paid on company profits, will increase to 25% in April 2023 – but small businesses with profits of £50,000 or less will continue to be taxed at 19%.

– There will be a “super deduction” for companies when they invest, reducing their tax bill by 130% of the cost for the next two years.

– Rates of income tax, national insurance and VAT kept at the same level but personal tax thresholds will be frozen from April 2026.

Other announcements

– The minimum wage will increase to £8.91 an hour from April.

– On apprenticeships, the Government is to double the incentive payments given to businesses to £3,000 for all new hires, of any age.

– All alcohol duties are frozen for the second year in a row and the planned increase in fuel duty is also cancelled.

– A “mortgage guarantee” was announced, with lenders who provide mortgages to homebuyers who can only afford a 5% deposit benefitting from a Government guarantee on those mortgages.

– The UK Infrastructure Bank will be located in Leeds, while the Treasury is to establish a new economic campus in Darlington, the Chancellor revealed.

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