Friday, March 5, 2021
Chancellor of the Exchequer Rishi Sunak announced the UK’s 2021 budget on Wednesday in the House of Commons. This comes amid significant damage to the country’s economy from the COVID-19 pandemic, in which over 700 thousand people have lost their jobs, with the economy shrinking by 10%.
Sunak announced an extension of the furlough scheme, which had been paying employees who could not work due to the pandemic 80% of their wages. He said it would be extended until September. The scheme also mentioned firms would have to pay 10% of this in July, and 20% in the months of August and September as the scheme ends. It was also announced that support for self-employed people would continue, with another grant for between February and April.
Other support for workers included the minimum wage increasing to £8.91/hour from April, and an existing £20 weekly increase in Universal Credit being extended through September.
Sunak also announced some changes to taxation in the country, with corporation tax rising to 25% in April 2023. Sunak said that this would be the lowest rate in the G7, and that businesses would only be taxed if they made profits of over £250 thousand, which is only 10% of companies. Companies with profits of less than £50 thousand will continue to pay 19% corporation tax. Sunak said that income tax, national insurance, and VAT would not change in this budget with alcohol and fuel duty continuing to be frozen.
For hospitality firms, VAT will continue to be frozen at a reduced rate of five percent. The contactless payment limit will be increased from £45 to £100 this year. New freeports were also announced in locations at East Midlands Airport; Felixstowe and Harwich; Humber; Liverpool City Region; Plymouth; Solent; and Thames and Teesside. These would allow reduced customs costs, and encourages investment.