As the Chancellor stood up to speak it felt as though all the headline announcements had been leaked beforehand. However, he lived up to his previous statements that he would be honest with the public about where the country is, having faced the biggest economic crisis outside or wartime.
During his 50 minute speech, he reiterated that the level of borrowing this year and last has been unprecedented at 17.3% and 10.1% of GDP respectively. However, with the continued vaccination rollout and the roadmap to unlock the country over coming months there is increased optimism of a quicker than hoped for bounce back in the economy.
So, what were the key points in the Spring Budget 2021? As we analyse the details and consider what they mean for our clients, here are the messages that stood out to me.
No immediate tax changes
One message that was clear throughout was that the government is committed to protecting jobs and livelihoods and ‘will do what must be done’ to achieve this.
With this in mind, it was a relief that there will be no immediate tax rises or changes, with a reiteration of the commitment to not increase income tax, National Insurance contributions or VAT. Perhaps surprising for some that there was no mention of any changes to capital gains tax or pensions. In fact, the only tax to go unaffected was corporation tax, albeit only a confirmation that the rate would increase in 2023 to 25%, in what feels like a return to the tax system before supposed simplification with the reintroduction of differing rates and a sliding scale.
Extended Government support
At this time though, and of greatest concern to many of our clients across the South West, is what support remains while restrictions remain. It was pleasing to hear the extension of many support measures until at least June and many going on until March 2022. Key amongst the support measures extended were:
• An extension to the furlough scheme until September 2021, with businesses only having to start contributing more from July 2021.
• A fourth and fifth round of support for the self-employed, including extending the scheme for those newly self-employed in 2019/20, albeit with some more targeted restriction to the last round.
• The extension of the VAT reduced rate for the hospitality until September 2021 and then a new 12.5% rate through to March 2022 (this is likely to give accounting teams an administrative headache though with yet another VAT rate to work with).
• 100% Business Rates relief for three months and then a reduced rate for the rest of the year.
• For the property market, a phasing out of the 0% SDLT band on residential property from June 2021 to help transactions complete.
Hope for the South West
Overall, although from a tax perspective it was a passive Budget statement it was not a Budget without hope. Without committing to deadline to achieve milestones there was a clear indication of the Chancellor looking to honour previous levelling up commitments and encourage investment in green technology.
It was also notable that there was only one reference to having left the EU, which has made it possible to introduce Freeports to the UK. On this, it was positive news for the South West that Plymouth will harbour one of only eight in the country, which will surely help encourage investment and employment in the region.
For a more detailed analysis of specific areas of the Budget please see our specific blogs as they are released over the coming days or join us for our FREE post Budget webinar tomorrow afternoon.
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