Spring Budget 2021 Summary

In today’s announcement the Chancellor, Rishi Sunak, started by saying he wanted to be honest about future plans to fix public finances and would do ‘whatever it takes’ during the pandemic.


Starting on a downbeat note of the 700,000 jobs that have been lost since last March he continued with the dismal fact that the economy has fallen by 10% which is the largest fall in 300 years.


Before detailing the proposed changes, the Chancellor soon turned the tone of the announcement to become more positive and explained that the economy is expected to recover quicker than initially expected.


Below we have summarized some of the key points from the 2021 Spring Budget.


Business Support

A new Restart Grant for businesses to help them re-open after lockdown has been introduced.

This will be available from April and will see non-essential shops receive up to £6,000. Personal care, hospitality, hotels and gyms could be in receipt of up to £18,000 dependant on their rateable value.

Local authorities will receive the money for these grants in April, but it is not yet clear when this will be distributed to businesses.


Recovery Loan Scheme

There has been a new loan introduced with an 80% government backed guarantee. Businesses of any size could be eligible for a loan from £25,000 – £10,000,000.

No personal guarantees would be expected on amounts borrowed up to £250,000 and unlike issues that arose from the first loan schemes introduced last year, a principle private residence cannot be taken as security.


Business Rates

The business rates holiday for all retail, hospitality and leisure businesses will continue at 100% relief to the end of June at which point it will be discounted by 66% for the rest of the year.


Hospitality and leisure VAT

The reduced rate of VAT at 5% will be extended until the end of September. It will then increase to 12.5% for 6 months before returning to the standard rate of 20% in April 2022.


Corporation Tax

In April 2023, the rate of corporation tax will increase to 25%. Despite the increase this is still the lowest amount in the G7.

Businesses will only be impacted if they are making certain levels of profits, so by definition those who are suffering will not be impacted further by this increase.


Businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate.

Businesses with profits of less than £50,000 will remain at 19% and those in between will see a gradual increase dependant on their levels of profit.


Having said that those companies with large amounts of reserves are those that Sunak would like to invest in a bid to grow the economy. There will be a reward to those that do in way of tax relief. The government is allowing up to 130% super-deduction on tax for investments on new plant and machinery made by companies.


Business Losses

There was a further announcement made for those who have trading losses incurred in any period ending 1st April 2020 – 31st March 2022. £2,000,000 of any unused losses from this period can be carried back against profits for three years.

This applies to both income tax and corporation tax.


Apprentice incentive

In a bid to increase employment the Chancellor announced a payment of £3,000, double the usual amount for employers who take on a new apprentice.

This incentive is alongside the others that have been introduced over the past 12 months such as the Kickstart Scheme.



As predicted, the Coronavirus Job Support Scheme has been extended to the end of September.

Employees will continue to receive 80% of their salary through to the end of the September.


Employers are not expected to contribute until July at which time a 10% contribution will be required, followed by 20% in August and September.




Sunak confirmed the Self-Employment Income Support Scheme has also been extended. The fourth grant will cover February to April, worth 80% of average trading profits up to £7,500.


In addition to this, it was announced that those who had previously slipped through the net due to being new to self-employment (who are likely to have missed out on grants 1-3) may now be eligible for grant 4 and 5.

Providing a tax return was submitted by midnight last night, the self-employed can claim for the next two grants available.


It has not yet been confirmed which periods will be used to calculate the grant payment however we do know, as stated above, that the fourth grant (February – April) will be available from tomorrow and will be based on 80% of trading profits.


The fifth grant will be available towards the end of July and will cover the period to end of September. This will be calculated on 3 months of trading profits.


For the fifth instalment it was announced that if you have evidence of your turnover falling more than 30% you will be eligible for a grant of 80%. If it has fallen less than 30% you will still be eligible for a grant but at a lower amount of 30%. No further information has been released regarding this yet.


Tax Thresholds

The government will not raise national insurance, income tax or VAT, but will freeze personal tax thresholds.



Personal tax

The national living wage will be increased to £8.91 meaning a pay rise of around £350 per year for those working full time on NLW.


The personal allowance will remain at £12,570 until 2026.

The higher-rate threshold will increase to £50,270 next year, this will then also be frozen to April 2026.


The inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption threshold will also be frozen.



Other points

-Alcohol duties will be frozen for the second year in a row.

-Fuel duty will also be frozen.

-Sunak announced the stamp duty holiday will be extended. The stamp duty holiday on properties up to £500,000 will continue until the     end of June. It will then drop to £250,000 until the end of September, and then return to usual levels (nil rate to £125,000) from 1st   October.

-A new mortgage guarantee was announced to help first-time buyers access 95% mortgages backed by HSBC, Barclays, Natwest,   Santander and Lloyds as early as next month.


At the moment details are still being released regarding some of the new schemes and as always we will endeavor to update you as soon as possible when vital information is announced.