A first for me. I am going to write this whilst listening to the chancellor talk through the 2021 budget and share the changes that will affect our personal finances. You will be wondering how does the budget affect you?
This feels like the most impactful budget of our time after the past year of Covid. With many changes that will affect us. And I want to share them on here. Published as soon as the speech is over!
A Three part plan
Firstly is protection of job for now, secondly and thirdly its the pay back.
Part One Protection of Jobs and Income Right Now
Furlough is extended to end of Sept. No change to terms. 80% of salary received for hours not worked. From July employers to contribute 10%, then 20% from August and September.
Support for self employed also extended until end of Sept. 80% for people who’s turnover has fallen by 30% or more. The newly self employed people who have submitted a 19/20 tax return (previously excluded) can now claim a grant.
No mention of the other excluded UK people including company directors like me.
Supporting low income households, the £20 per week increase to universal credit to continue for a further 6 months. £8.91 minimum wage increase from April 2021.
Extra 19m goes towards domestic violence programs. Additional £10m to veterans with ongoing mental health issues.
Business protection. New restart grant to help businesses to reopen, a grant of up £6k per property for non essential retail. Hospitality and personal care to get £18k grants for when they reopen.
New recovery loan scheme. Any business can apply for £25k upwards until end of 2021. Government will back 80% of loan. Business rates holiday until end of June 2021.
5% VAT extended until end of Sept 2021 for hospitality, interim 12.5% for next 6 months, returning to 20% April 2022.
Stamp Duty holiday extended to 30th June 2021, with reduction to £250k until end of Sept. Mortgage guarantee scheme with 5% deposit available from April 2021.
Part Two & Three – The Pay Back
We have borrow £355bn this year, highest level of borrowing since World War 2. And of course this must be paid back starting from 2023. It will take decades to pay it back.
The personal tax thresholds will be frozen for the next five years. £12,570 from 2022 its will stay here until 2026. This means the first £12,570 of what you earn is tax free, this allowance normally increases each year. This means that the tax we pay doesn’t increase or reduce it just stays the same. But alas as inflation kicks in what we buy costs more so we will have less money in our pockets.
£50,270 from 2022 for when the upper tax limit kicks in to remain the same until 2026. Inheritance and Pensions allowances remain the same until 2026.
In April 2023 corporation tax increases to 25%. Ouch Ouch Ouch. But a softener, businesses with profits of 50k or less will maintain the current 19% corporation tax rate. Tapered up to £250k with just businesses with profits over this paying 25%.
Spirits, wine, cider, beer all duty increases are frozen for 2nd year in a row. No increases to fuel duty either.
I want to publish this quickly and share with you how does the budget affect you, so you don’t have to read it anywhere else. For the full details of everything go to the government website here.