At the beginning of March, Rishi Sunak delivered the 2021 UK Budget, outlining all the various plans to help the country and economy bounce back after the coronavirus pandemic. In today’s blog, we will go through all the key talking points and what they mean for you.
An extension to the Furlough scheme
Originally, the Furlough scheme was due to end on the 30th of April, but Sunak announced that this will be extended to the end of September. The only change is that employers are now asked to make contributions of 10% (rising to 20%) from July an August.
Stamp duty holiday extended
Another extension comes in the form of the stamp duty holiday, which was meant to end at the end of this month. The new end date is the 30th of June, which is fantastic news for property buyers. There will be 0% stamp duty on the first £500,000 of property purchases, though this is going to be halved after June 30th until the end of September, with rates resuming as normal in October.
Sunak also announced more good news for homebuyers, with the inclusion of government-backed 95% mortgages in April. HSBC, Barclays, Santander and Lloyds will all be able to offer mortgages that only require a 5% deposit. This is available for any buyer on all properties up to £600,000. It’s seen as a way to help people afford a home if they’re unable to pay for a large deposit.
Tax thresholds are frozen until 2026
One of the biggest announcements is that income tax and National Insurance thresholds will be frozen from the start of the next tax year, all the way until 2026. What does this mean for you? Well, the threshold will increase as usual for the 2021-22 tax year, but it will stay the same for the next five years. In essence, you could pay more tax over this period as you miss out on the thresholds potentially rising every year – as they have been doing for many years.
SEISS grants confirmed
The fourth and fifth instalments of the Self-Employed Income Support Scheme have finally been confirmed in the budget announcement. Those on this scheme will receive their fourth payment covering February to April, with the fifth one covering May to September. It’s a big boost for the thousands of self-employed individuals who need support during this troubling time.
A freeze to pensions
Yet another freeze comes in the form of your lifetime allowance in a private pension. It is now frozen at £1,073,100 for the next five years. This basically means you can’t contribute more than this to your pension until April 2026. It’s unlikely to affect the majority of the UK, but if you do you can be taxed between 25-55% for exceeding the cap!
Corporation tax rising in 2023
The final thing to cover is the plans to increase corporation tax in 2025. Sunak announced that it will rise from 19% to 25%. While a dramatic rise, it still puts the UK as one of the lowest corporation tax rates in the world. Sunak also added that this rate only applies to companies with profits of over £50,000.
These are the most relevant and main things to gather from the March 2021 budget. However, you can view the whole thing here if you’re interested in seeing all the various intricacies and what it means for the economy.