In his budget speech,Rishi Sunak emphasized the effect theCOVID-19 pandemic has had on the economy, with 700,000 people losing their jobs, the economy shrinking by 10% (the largest fall in 300 years), and the highest borrowing outside wartime.[6][7][8] It is expected that unemployment will peak at 6.5% (an improvement on the previous estimate of 11.9%) and that thebudget deficit will reach £355 billion in 2021, or 17% ofGDP, the highest level in peacetime.[8]
£28 million to increase the UK's capacity for vaccine testing, clinical trials and improve the UK's ability to acquire samples of newvariants of SARS-CoV-2
£22 million to test the effectiveness of combinations of different COVID-19 vaccines
An extra £5 million investment in clinical-scalemRNA manufacturing
Extending £500NHS Test and Trace support payments in England until the summer
TotalCOVID-19 support package for 2021–22 is £352 billion
Tax-free personal allowance frozen at £12,570 for five years from 6 April 2021
Higher rate income tax threshold frozen at £50,270 for five years from 6 April 2021
Corporation tax on company profits above £250,000 to rise from 19% to 25% in April 2023
Rate to be kept at 19% for smaller companies with profits of less than £50,000
Stamp Duty holiday on house purchases in England and Northern Ireland extended to 30 June 2021 for purchases up to £500,000 and to 30 September for prices up to £125,000
Inheritance tax thresholds, pensions life time allowances and annualcapital gains tax exemptions to be frozen at 2020–2021 levels until 2025–26
It is expected that the measures will cause borrowing to fall to 4.5% of GDP in 2022–23, 3.5% in 2023–24, 2.9% in 2024–2025, and 2.8% in 2025–2026.
Thenational debt is expected to rise from 88.8% of GDP in 2021 to 93.8% in 2022, 97.1% in 2023–24, 97% in 2024–2025 and 96.8% in 2025–2026
Tax breaks for firms to "unlock" £20 billion worth of business investment
Firms can deduct investment costs from tax bills, reducing taxable profits by 130%
Incentives for firms to take on apprentices to rise to £3,000, and £126 million for traineeships
LowerVAT rate for hospitality firms maintained at 5% until September, and an interim 12.5% rate will then apply for the following six months
Business rates holiday for firms in England to continue until June, followed by a 75% discount
£5 billion in Restart grants for shops and other businesses in England forced to close
£6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
Visa scheme to help start-ups and rapidly growing tech firms source overseas
Contactless payment limit to rise to £100 from 15 October 2021
All alcohol duties to be frozen; noextra tax on spirits, wine, cider or beer
Fuel duty to be frozen for eleventh consecutive year
Labour Party leaderKeir Starmer announced that theLabour Party will back plans to increase thecorporation tax after Sunak announced any rises would be delayed to 2023; Starmer andShadow Chancellor of the ExchequerAnneliese Dodds had previously voiced strong opposition to tax rises leading up to the budget.[12][13][14] However, Starmer has criticised the budget for doing little to address inequality and for prioritizing areas which are represented byConservative PartyMPs, arguing that the budget failed to "rebuild the foundations of our economy or to secure the country's long-term prosperity".[12] FormerShadow Chancellor of the ExchequerJohn McDonnell similarly claimed that working people would be hit hard by the freeze to the income tax threshold and the cut to universal credit uplift.[12]
There has been much discussion over the corporation tax raise.Rishi Sunak has claimed that even after the reform, the UK's headline rate would still be the lowest in the G7 nations and would raise an extra £17 billion.[6] However, several commentators and business-persons have suggested that the move could make the UK less attractive to investors and hit dividends; the UK would not look as competitive internationally on other measures because it is much less generous in the share of capital spending that companies are allowed to set against taxable profits.[18] Former ConservativeJustice SecretaryDavid Gauke has advocated in favour of raising income tax rates rather than corporation tax, but noted that theConservative Party's manifesto in the2019 general election promised not to raise income tax, national insurance contributions and VAT.[19] In contrast, former Labourshadow ministersIan Lavery andJon Trickett supported raising corporation tax, arguing that it would hit the profits of big businesses rather than hard-pressed families.[20] Former LabourShadow Secretary of State for JusticeRichard Burgon warned that if the Labour Party does not support a raise in business taxes, it could be "outflanked" by the Conservatives.[20]
Some commentators argued that the freeze in the income tax threshold would effectively increase an individual's tax burden, with theOffice for Budget Responsibility predicting that more than one million people would start paying income tax in the next five years.[21] Similarly, some health officials voiced opposition to the budget for failing to include detailed plans for theNational Health Service and public services.[22] Charmaine Griffiths of theBritish Heart Foundation warned that the NHS would not be able to tackle the backlog of treatment and care caused by the pandemic as the budget does not pre-empt the possible rise inCOVID-19 infections in winter.[22]
Culture industry leaders welcomed the budget, but called for more help for freelancers and insurance cover for events.[23] Julian Bird of theSociety of London Theatre said the extension of furlough, self-employed support, business rates and VAT would help the industry, but urged the government to help those who "fallen through the gaps" of furlough and self-employed support.[23]Cameron Mackintosh said that theatre producers would welcome the help given by the government, but called for more detail.[23] Campaigners related to theThalidomide scandal welcomed the support given to survivors.[24]
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