Chancellor sets out steps to fix economy in Budget
The Chancellor Rishi Sunak has delivered his second budget with a pledge to do whatever it takes to fix the economy.
He announced that millions of people across the UK will continue to be supported through the next stage of the pandemic with an extension of the government’s furlough scheme. Employees will continue to receive 80 percent of their salary until the end of September. Employers will have to pay 10% of staff wages in July and 20% in August and September.
Mr Sunak confirmed that he is set to extend the Coronavirus Job Retention Scheme (CJRS)– which has protected 11.2 million jobs since the start of the pandemic until the end of September.
As the tax return deadline has now passed, he announced that more than 600,000 people, including the newly self-employed in 2019-20, will now be eligible for government support with a 4th grant covering February to April, and a 5th grant from May.
Mr Sunak also doubled the apprenticeship bonus to £3000 for every new apprentice hired between 1 April and 30 September 2021.
There was further support for businesses too, with new Restart Grants to help them reopen. The “restart grants” of up to £18,000 will be available to shops, leisure and hospitality businesses in England. There will also be grants of £6000 for non-essential retailers.
There were announcements on VAT too with the 5 percent reduced rate of VAT for hospitality and leisure businesses extended for six months to 30th September. It will then revert to an interim rate of 12.5 percent for another six months before returning to the standard rate of 20 percent until April 2022.
The 100% business rates holiday in England will also continue from April until June.
Mr Sunak also confirmed the three-month extension to the stamp duty holiday until the end of June.
He said the amount the government has borrowed is matched only by the borrowing in the two world wars. In total the amount of fiscal support the government has given since the start of the pandemic comes in at 407 billion pounds.
That will have to be paid for with tax rises – some of which were laid out today. The threshold for paying the basic rate of income tax will rise to £12,570 next year.
For higher-rate payers, the threshold will be £50,270. Both rates will stay the same until 2026. Further, the VAT registration threshold will remain at £85,000 until 2024.
in 2023 he will raise corporation tax to 25 percent – up from 19 percent. He also announced that, to boost investment, there will be a “super deduction” in tax for companies that invest in innovation. However, he also announced a Small Profits Rate of 19 percent for businesses with a profit of under £50,000.
It’s hoped these measures will help the economy to recover and the Office for Budget Responsibility suggests the economy will be back to something like ‘normal’ by the middle of next year, but in the longer term, it will be 3 percent smaller than it was prior to the pandemic.
Mr Sunak admitted it will be the work of “many governments” over many years to pay back the debt taken on during the pandemic.