BUDGET 2021
05 March 2021
The Chancellor of the Exchequer, the Rt Hon Rishi Sunak MP, presented his Budget to Parliament on Wednesday 3 March 2021.
Economic forecast:
- Return to pre-Covid levels by middle of next year – faster than predicted last November
- But economy will be 3% smaller in five years’ time than it would have been, due to Coronavirus
- Unemployment to peak at 6.5%
- Economy to grow by 4% this year, then 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the following years – this suggests no significant improvement to productivity following recovery
Energy related measures:
- Bank of England instructed to consider net-zero aims in its monetary and bond purchasing decisions – BEAMA is seeking further information on implications of this scheme, but BofE currently holds around £20bn in corporate bonds
- BEAMA commented that funding needs to go towards appropriate measures, and shared our ‘Future Ready Homes’ checklist
- Reiterated commitment to a ‘Green Taxonomy’ to provide a common standard for measuring firms’ environmental impact – this is also being developed by EU
- Confirmation of an Infrastructure Bank in Leeds – this is alongside another recently promised institution in Leeds seeking to build cooperation on green finance. The £12bn initial capital over five years of the new Bank is estimated to be lower than the annual investment provided under EU schemes during the UK’s membership.
- Launching sovereign green bond and consumer savings green bond
- Specific funding for projects such as a low energy transition zone in Aberdeen and hydrogen hub in South Wales
- Fuel duty will be frozen again
Other Measures announced in the Budget include:
- An extension of the Coronavirus Job Retention Scheme to September 2021 across the UK. Employers will be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September, as the economy reopens.
- An extension of the UK-wide Self Employment Income Support scheme to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
- A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
- An extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September will support the housing market and protect and create jobs.
- A new mortgage guarantee scheme will enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit.
- Extension of the apprenticeship hiring incentive in England to September 2021, and an increase of payment to £3,000.
- £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
- Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.
- Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
- To further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company.
- The rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. The increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%, and a taper above £50,000 will be introduced, so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
- Beginning April 2021, the new super-deduction capital allowance will cut companies’ tax bill by 25p for every pound they invest in new equipment.
- Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
- The £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies, such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.
- Reforms to the immigration system will help ambitious UK businesses attract the brightest and best international talent.
- A new Help to Grow scheme, to offer up to 130,000 companies across the UK, a digital and management boost.
- Build Back Better: our plan for growth sets out the Government’s plans to support growth through significant investment in infrastructure, skills and innovation, and to pursue growth that levels up every part of the UK, enables the transition to net zero, and supports our vision for Global Britain.
All Budget 2021 documents can be found here.
