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Budget 2021 summary: key changes and highlights at a glance

Tom Rees
·5 min read
Budget key points summary
Budget key points summary

Rishi Sunak has unveiled a £65bn boost for Covid-hit businesses and workers at the Budget but also warned he will soon begin the painful process of repairing the public finances.

The Chancellor unveiled extensions to the furlough scheme, business rates relief, the £20 boost to weekly Universal Credit payments and the stamp duty holiday. A tax-cutting scheme to spur business investment, a new loan guarantee programme and the location for the Government's northern hubs were also announced

However, Mr Sunak started to shore up the public finances, announcing a tax hike for large businesses in 2023 and a "stealth tax" on workers.

Here’s everything the Chancellor announced in the Spring Budget 2021:

Key Budget 2021 announcements at a glance:

  • Furlough support extended until September

  • Corporation tax will rise to 25pc in 2023 but small firms benefit from lower rate

  • £5bn grant scheme announced for high street and hospitality firms

  • OBR predicts swifter recovery; GDP back at pre-Covid levels in mid-2022

  • £20 boost for weekly Universal Credit payments extended for six months

  • Stamp duty cut and business rates holiday extended

Follow our live business blog for the latest reaction and analysis to the Spring Budget 2021.

Jobs
  • The furlough and self-employment income support schemes have been extended until the end of September. Furloughed employees will receive 80pc of their salary but businesses will be asked to contribute to their wages from the end of July as the recovery gathers pace. The newly self-employed in the 2019-20 financial year will now also be able to receive the payments.

  • The Treasury has confirmed extra funding for apprenticeships with a cash incentive to take on apprentices boosted by £1,000 to £3,000 per hire.

  • The Chancellor has extended the £20 boost to weekly Universal Credit payments for a further six months.

Taxes
  • Corporation tax will rise from 19pc to 25pc in April 2023 but Mr Sunak said the UK will still have the lowest rate in the G7.

  • However, small firms with profits under £50,000 will still enjoy the lower 19pc corporation tax rate. Only 10pc of companies will pay the full higher rate, the Chancellor said.

  • Mr Sunak also announced a new "super deduction" - a tax relief to spur business investment. The Treasury expects the relief - which will cut taxes by 25p for every pound invested - to be worth £25bn to UK businesses over a two-year period.

  • The Chancellor said income tax thresholds will be frozen until 2026 after next year's planned increases. Inheritance tax thresholds and the pensions lifetime allowance will also be frozen for five years.

  • Increases to alcohol duties and fuel duty were scrapped.

Housing market
  • The Chancellor has unveiled a mortgage guarantee scheme to help Britons get on the housing ladder with small deposits. Under the scheme, the Government will offer lenders a guarantee, incentivising them to boost the number of riskier 95pc mortgages.

  • The Chancellor also announced a three-month extension to the stamp duty holiday for properties under £500,000. The holiday for properties worth less than £250,000 will apply until the end of September.

Saving Covid-hit sectors
  • Businesses will be able access a new "Recovery loan scheme" to replace the Bounce Back and coronavirus business interruption loan schemes. Loans between £25,000 and £10m will be available with a 80pc government guarantee.

  • The Chancellor has unveiled a £5bn Restart Grants scheme that will provide Covid-hit firms up to £18,000 to boost their survival chances.

  • The cash injection will be aimed at retail, hospitality, accommodation, leisure and personal care firms. Non-essential retailers will be able to access £6,000 per business.

  • Business rates relief for the hardest hit sectors, such as retail and hospitality, has been extended for three months in full. For the remaining nine months of the year, business rates will be discounted by two-thirds - a £6bn tax cut for firms, Mr Sunak said.

  • The VAT cut to 5pc for the hospitality, accommodation and attractions sectors will be extended until the end of September. The rate will then be 12.5pc for a further six months.

Other announcements
  • The Bank of England will be given a new monetary policy remit with green goals to help tackle climate change.

  • Mr Sunak revealed the new UK Infrastructure Bank will be based in Leeds. It will be given £12bn of capital and £10bn of government guarantees to help drive an investment boom. Almost £400m will be invested alongside the private sector in high-growth start-ups.

  • A new Treasury campus will be set up in Darlington in the north east of England.

  • More than £1bn for new town redevelopment deals was announced.

  • Eight new free ports will be set up at East Midlands airport, Liverpool, Felixstowe, Plymouth, Thames, Teesside, Humber and Solent.

  • The Treasury has set aside an extra £1.7bn to aid the vaccine rollout.

  • The UK will launch a green savings bond aimed at retail investors to help raise money to drive the transition to net zero carbon emissions.

Economic forecasts
  • The Office for Budget Responsibility predicted a "swifter and more sustained recovery" than its November forecasts but warned of long-term scarring.

  • The Budget watchdog said GDP will return to pre-Covid levels by mid-2022 but the economy will be 3pc smaller than its pre-Covid path in five years.

  • GDP will rebound 4pc in 2021, down from the previous prediction of 5.5pc, while growth will accelerate to 7.3pc next year. Unemployment will peak at 6.5pc, the OBR predicted.

  • Mr Sunak said total fiscal support will reach £407bn. The OBR revealed that borrowing hit £355bn in 2020-21 and will still be £234bn in 2021-22 - higher than the worst year of the financial crisis. The deficit will fall to 4.5pc of GDP in 2022/23.

Read More: What the 2021 Budget means for you, from pension savings to tax payments