Budget 2021: A summary of the key points
On Wednesday 3rd March, Chancellor of the Exchequer, Rishi Sunak, delivered his Spring Budget including his plans to support the UK economy on its path to recovery.
Coronavirus Job Retention Scheme (CJRS)
- The government is extending the CJRS for a further five months from May until the end of September 2021
- Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June
- From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens
Rise of the National Living Wage
- The National Living Wage will increase to £8.91 per hour, equivalent to a pay rise of £350 for someone working full time on the National Living Wage
Self-Employment Income Support Scheme (SEISS) – fourth and fifth grant
- The fourth SEISS grant will be worth 80% of three months’ average trading profits, capped at £7,500 in total. The grant will cover the period February to April and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self-Assessment tax return to be eligible for the fourth grant
- Over 600,000 individuals may be newly eligible for SEISS
- There will be a fifth and final SEISS grant covering May to September. The value will be determined by a turnover test, to target those who need it the most as the economy reopens
High quality traineeships for young people
- An additional £126 million will be provided in England for high quality work placements and training for 16-24-year olds in the 2021/22 academic year
- Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee
Payments for employers who hire new apprentices
- Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.
- This is in addition to the existing £1,000 payment the government provides for all new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.
Supporting apprenticeships across different employers
- A new £7 million fund will be introduced from July 2021 to help employers in England with portable apprenticeships to enable those working across multiple projects (with different employers) benefit from the level of training that an apprenticeship provides.
- Employers will have access to a diverse apprenticeship talent pipeline.
Piloting new technologies to help people find jobs
- £1.3 million will be invested over 2021-22 and 2022-23 to pilot new technologies to support in or out-of-work people to find new job opportunities which are best suited to their skills and experience.
Recovery Loan Scheme
- From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to continue providing finance to UK businesses.
- The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
- The government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses
- The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated. Altogether, this support will cost £5 billion. This brings the total cost of cash grants provided by the government to £25 billion
Statutory Sick Pay (SSP) Rebate Scheme
- Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee.
VAT Deferral New Payment Scheme
- The original VAT deferral on VAT returns has been extended to allow those who signed up to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
VAT reduction for the UK’s tourism and hospitality sector
- The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021.
- To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
Business rates reliefs
- The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021.
- This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
- Nurseries will also qualify for relief in the same way as other eligible properties. When combined with Small Business Rates Relief, this means 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April 2021, with the vast majority of eligible businesses receiving 75% relief across the year.
Business rates repayments
- The government will legislate to ensure that the business rates relief repayments that have been made by certain businesses are deductible for corporation tax and income tax purposes.
- To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of corporation tax will increase from April 2023 to 25% on profits over £250,000.
- The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate. In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK.
Building Back Better – The Green Shoots of Recovery
- From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. This upfront super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive.
- Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.
UK Infrastructure Bank
- The new UK Infrastructure Bank will provide financing support to private sector and local authority infrastructure projects across the UK, to help meet government objectives on climate change and regional economic growth. The Bank will be able to:
- deploy £12 billion of equity and debt capital and be able to issue up to £10 billion of guarantees
- offer a range of financing tools including debt, hybrid products, equity and guarantees to support private infrastructure projects
- from the summer, offer loans to local authorities at a rate of gilts + 60 basis points for strategic infrastructure projects
- establish an advisory function to help with the development and delivery of projects the institution will begin operating in an interim form later in spring 2021.
Help to Grow: Management
- The government will offer a new UK-wide management programme to upskill 30,000 SMEs in the UK over three years.
- Developed in partnership with industry, the programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. Over 12 weeks, and 90% subsidised by government, this programme will equip SMEs with the tools to grow their businesses and thrive
Help to Grow: Digital
- The government will launch a new UK-wide scheme in the autumn to help 100,000 SMEs save time and money by adopting productivity-enhancing software
- This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.
- The government is modernising the immigration system to help the UK attract and retain the most highly skilled, globally mobile talent – particularly in academia, science, research and technology – from around the world.
- To do this, the government will:
- introduce, by March 2022, an elite points-based visa. Within this visa there will be a ’scaleup’ stream, enabling those with a job offer from a recognised UK scale-up to qualify for a fast-track visa
- Reform the Global Talent Visa
- Review the Innovator Visa
- Launch the Global Business Mobility Visa
- Provide practical support to small firms that are using the visa system for the first time
- Modern the immigration sponsorship system to make it easier to use
- Establish a global outreach strategy by expanding the Global Entrepreneur Programme
Future Fund: Breakthrough
- Building on the government’s Future Fund, the government will commit £375 million to introduce Future Fund: Breakthrough, a new direct co-investment product to support the scale up of the most innovative, R&D-intensive businesses
- The British Business Bank will take equity in funding rounds of over £20 million led by private investors to ensure these companies can access the capital they need to grow and bring prosperity to communities across the UK