In today’s Budget speech, Chancellor Rishi Sunak promised to “do whatever it takes” to improve the economy, highlighting “huge challenges” for the public finances with record borrowing at £355bn.
Off-payroll tax wasn’t mentioned in today’s Budget, but its implementation in April 2021 was confirmed, buried in the supporting documents.
Expected changes to capital gains tax and ‘Entrepreneur’s Relief’ did not materialise. Income tax bands will be frozen from next year. While fuel and other duties will not increase for now, and we have seen an extension to the stamp duty holiday.
Although the impact of the Coronavirus will be felt one way or another, the measures announced today are more of a gentle push rather than a short, sharp shock.
The good news was the Office for Budget Responsibility expects the economic recovery to be quicker than was previously expected, with the economy predicted to return to pre-Covid levels by mid-2022.
Here we highlight the key take-outs:
- Corporation Tax rules to change in 2023. Remain at 19% for companies with profits of up to £50k but companies with profits over £50k will be subject to tapering, with a 25% rate introduced for businesses with profits over £250k.
- Small business grants will support digital growth, with the ability to claim 50% of the cost of software to improve productivity.
- A ‘super deduction’ tax incentive to encourage businesses to invest.
- More generous tax treatment of loss-making businesses.
- Access to grants for an additional 600,000 self-employed people.
- Universal Credit uplift of £20 per week to continue for a further 6 months.
- Grants and support for Covid-affected businesses under a new Restart grants programme and business recovery loan scheme extended.
- The furlough scheme has been extended to September and businesses will be asked to contribute from July onwards.
- National Living Wage will rise to £8.91 from April.
- Various schemes to help people obtain skills for work and new incentives for businesses to take on apprentices.
- Stamp duty ‘holiday’ on properties up to £500,000 to continue to the end of June 30th June. Nil rate band will apply to properties valued up to £250k to the end of September. Lenders can offer mortgages based on 5% deposits and receive government-backed guarantees.
- Income tax, National Insurance and VAT to remain unchanged.
- Freeze personal tax thresholds.
- Freeze of duty on alcohol and fuel.
- Launch of a UK Infrastructure Bank to support the green economy.