The Economy
✔️ The Chancellor said coronavirus has caused one of the “largest, most comprehensive and sustained economic shocks this country has ever faced”.
✔️ In good news, The Office for Budget Responsibility (OBR) is now forecasting “a swifter and more sustained recovery” than they expected in November, predicting the economy will be 3% smaller than it would have been in five years’ time because of the coronavirus crisis. Growth this year is expected to be 4%, 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.
Coronavirus support
✔️ The furlough scheme will be extended to the end of September, as will support for the self-employed.
✔️ A new restart grant will start in April to help businesses reopen, with £5 billion of funding.
✔️ The business rates holiday for the retail, hospitality and leisure sectors will continue until the end of June, and will be discounted by two thirds for the remaining nine months of the year.
✔️ The 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months to the end of September, with an interim rate of 12.5% for another six months after that.
Taxation
✔️ The rate of corporation tax, paid on company profits, will increase to 25% in April 2023 – but small businesses with profits of £50,000 or less will continue to be taxed at 19%.
✔️ There will be a “super deduction” for companies when they invest, reducing their tax bill by 130% of the cost for the next two years.
✔️ Rates of income tax, national insurance and VAT are to be kept at the same level but personal tax thresholds will be frozen from April 2026.
✔️ The inheritance tax threshold and the pensions lifetime allowance will be maintained at their current levels, along with the annual exempt amount in capital gains tax, until April 2026 and, for two years from April 2022, the VAT registration threshold.
Other announcements
✔️ The minimum wage will increase to £8.91 an hour from April.
✔️ On apprenticeships, the Government is to double the incentive payments given to businesses to £3,000 for all new hires, of any age.
✔️ All alcohol duties are frozen for the second year in a row and the planned increase in fuel duty is also cancelled.
✔️ Freeports – “special economic zones with different rules to make it easier and cheaper to do business” – will be located at East Midlands Airport, Felixstowe and Harwich, the Humber region, the Liverpool City Region, Plymouth, Solent, Thames and Teesside.