By Rachael Grealish
It’s the day many people have been waiting in baited breath for – Budget Day, the day The Chancellor of the Exchequer sets out his long-term economic plan.
Speaking from the House of Commons today, Wednesday March 3, Rishi Sunak has confirmed the government budget which includes the extension of the furlough scheme and the £20-a-week uplift to Universal Credit payments.
The Chancellor also added working Tax Credit claimants will be given more support for the next six months, with a one-off payment of £500.
He said: “This budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people.”
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
“And, third, in today’s budget we begin the work of building our future economy.”
The Budget key points:
- The furlough scheme will be extended until the end of September – 80 percent of salaries will be paid by the government, until businesses reopen when the business will be asked to contribute.
- The self-employed will also be extended until the end of September – with 600,000 more people eligible – those who became self-employed last year will now be able to apply.
- The Universal Credit uplift of £20-a-week will continue for another six months
- Working Tax Credit claimants will also be given more support for the next six months, with a one-off payment of £500
- An extra £19m for domestic violence programmes – the Chancellor said domestic violence as ‘one of the hidden tragedies of lockdown’.
- A new restart grant of up to £6,000 per premises opening in April and up to £18,000 for firms that open up later – non-essential retail stores can open first, but gyms and other hospitality venues may be restricted due to guidelines will be able to receive the larger amount.
- Hospitality and tourism will continue to enjoy a 5 percent reduced rate of VAT for a further six months.
- The stamp duty holiday on properties worth up to £500,000 will be extended until the end of June.
- A new mortgage guarantee scheme will be implemented – first time buyers only need a 5 percent deposit.
- A UK Infrastructure Bank, located in Leeds will be open this Spring – this will invest in public and private projects to finance a green industrial revolution and will have an initial capitalisation of £12bn.
- An extra £1.6bn is being allocated for the vaccine rollout.
- There will be a £300m culture recovery fund.
- There will be £300m for sports clubs.
- Business rates relief will be extended – in a move worth £6bn.
- Minimum wage will increase to £8.91 per hour from April.
But the main question on everyone’s lips was how is all the borrowing going to be paid for – in the last fiscal year the government borrowed a record-high of £355 billion.
Sunak said: “The amount we’ve borrowed is only comparable with the amount we borrowed during the two world wars.
“It is going to be the work of many governments, over many decades, to pay it back.
“Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked. When crises come, we need to be able to act.”
Following this the Chancellor hit the topic of tax.
Tax key points:
- The government is not going to raise the rates of income tax, national insurance, or VAT.
- The income tax threshold will increase next year to £12,570, but it will be kept at this level until 2026.
- The higher rate threshold will rise to £50,270 next year, but will also then stay there until 2026.
- Corporation tax will increase to 25 percent in 2023
- Maintaining, at their current levels, until April 2026: The inheritance tax thresholds, the pensions lifetime allowance, the annual exempt amount in capital gains tax and, for two years from April 2022, the VAT registration threshold.
The Chancellor’s final point on tax changes was his introduction of ‘The Super Deduction’.
For the next two years, when companies invest, they can reduce their tax bill by 130 percent in a super deduction.
Sunak explained: “Under the existing rules, a construction firm buying £10m of new equipment could reduce their taxable income, in the year they invest, by £2.6m.
“With the Super Deduction, they can now reduce it by £13 million. We’ve never tried this before in our country,” the chancellor says.
“The OBR have said it will boost business investment by 10 percent ; around £20bn higher per year.
The Chancellor also announced planned increases in duties for spirits, wine, cider and beer will be cancelled, with all alcohol duties frozen for a second year in a row. Fuel duty will also be frozen.
The full details of The Budget will be available to read at Gov.uk.
The leader of the opposition responded to the Budget – you can read the response here.