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The Spring Budget is something that happens every year around March in the UK where the Chancellor of the Exchequer announces the spending plans for the upcoming year. This can range from new allowances, tax cuts, updates to borrowing (e.g. mortgages) and more.
This year, Rishi Sunak set out his plans for our financial recovery from COVID-19. It included help for businesses that have been under financial strain during the lockdowns, tax hikes and support schemes.
Scroll down to read a summary of what’s to come.
In 2020, we saw three payments to support the self-employed who had lost out on business as a result of COVID-19. But many of the newly self-employed missed out for falling under the eligibility threshold. Now, anyone who filed their 2019/20 tax return by 2nd March 2021 is eligible to claim the fourth and fifth payments.
The fourth payment covers February, March and April. You can claim up to 80% of your average monthly profits up to £2,500 per month. The fifth payment covers May, June and July and what you can claim will depend on your earnings over the period. It will be announced later in the year how much this grant will come to.
Read more about SEISS here.
And be aware that if you claimed the SEISS grant in 2020 or will be claiming this year’s grants, you will owe tax on this like any other income.
The furlough scheme which lets employers pay their non-working employees 80% of their wages has been extended once more. Employers can pay employees up to £2,500 per month on furlough. The scheme was first announced in April 2020 and has been extended twice so far. This third extension takes us to a September deadline. But this time, employers must pay 10% of these wages themselves in July and 20% in August and September.
OK, it’s not that dramatic. The government basically announced that there will be a freeze on changes to Income Tax and National Insurance for the next five years until 2026. Here’s how this will look:
This means that there will be no real change to your current take home earnings, but it’s what’s known as a “stealth tax”. It’s expected to raise up to £6 billion by stealthily pulling people into the higher income bracket as their wages rise.
The Stamp Duty holiday that was announced in 2020 has been extended until 30th June 2021. The holiday enables those buying houses to avoid paying Stamp Duty on top of their purchase, saving up to £15,000.
The thinking was that this would boost the property market by making property purchases more affordable. Originally, it was set to end by 31st March 2021.
Not sure what Stamp Duty is? Take a look at our blog.
Along with the Stamp Duty holiday, Rishi Sunak also announced mortgage guarantees for first-time buyers. From April 2021, the government will be underwriting 95% mortgages on properties worth up to £600,000. This means that you can buy with a 5% deposit, despite lenders recently withdrawing low-deposit mortgages.
Again, the hope is to boost the property market by making it easier to enter for those buying their first home.
Two changes have been announced to pensions.
As a result of the effect of COVID-19 on businesses, Rishi Sunak exempted some sectors from paying business rates in 2020. These included the hospitality sector and non-essential retail businesses. This holiday was due to end in March 2021 but has now been extended until 30th June 2021. Here’s what you need to know:
The UK’s historically low Corporation Tax rate of 19% is going up from 2023. Here’s a quick rundown of the changes:
Both fuel and alcohol duty will remain frozen. For alcohol, this is the second year in a row that the rate has been frozen. For fuel, it’s the 11th!
Want to read about the budget in full? Check out HMRC’s website. They detail all the changes and spends here.