Full Budget 2021 round-up: Furlough, stamp duty, income tax, universal credit & more
The Chancellor Rishi Sunak has delivered one of the most important Budgets we've had for years, with key announcements on the future of coronavirus income support and big news on stamp duty, income tax, universal credit, the pensions lifetime allowance, mortgages, contactless payments and more. We've a round-up of the key news below, plus links to more in-depth analysis.
The Budget set out the Government's tax and spending plans for the year ahead. Here are the key announcements:
- The furlough scheme and self-employed income support has been extended. Furlough will now run until the end of September - it had been due to close at the end of April - while the Self-Employment Income Support Scheme will be extended to 600,000 people who were previously excluded. A fifth grant for the self-employed has also been confirmed, with the amount you can claim dependent on how your turnover's changed. For full details, see our Furlough and self-employed income support extended MSE News story.
- The current stamp duty holiday (in England and Northern Ireland) will be extended until the end of June. The holiday - which means buyers don't need to pay stamp duty on the first £500,000 of a property's purchase - had been due to end on 31 March. But it will now continue until the end of June. Then until September the point at which you start paying stamp duty will be cut to £250,000, before returning to the usual £125,000 after that. For more details, see our
Stamp duty holiday extended MSE News story.
- A new mortgage scheme to help buyers with a 5% deposit will be launched. It'll start from April and several major lenders have already agreed to take part. For more details, see our 5% deposit mortgages guide.
- The universal credit uplift of £20 per week will continue for a further six months. Plus working tax credit claimants will get equivalent support for a further six months. And the suspension of the universal credit minimum income floor has also been extended until August – good news for many self-employed claimants, as it means you're not assumed to be earning at least the minimum wage when the amount you're due is calculated. For full details, see our Universal credit £20/week uplift MSE News story.
- Income tax thresholds have been frozen after a rise this April - meaning in real terms many will pay more tax. The Chancellor said the Government would deliver on its promise to increase the personal allowance - the rate over which people start paying tax - to £12,570 next year, but said it would then stay unchanged until April 2026. The higher rate threshold will similarly be increased next year, to £50,270, but will then also be frozen until 2026. For full info see our Income tax thresholds frozen MSE News story.
The personal allowance level applies across the UK, but the higher rate threshold (for non-savings and non-dividend income) only applies in England, Wales, and Northern Ireland.
While technically the Government hasn't raised tax rates today, its decision to freeze thresholds means many who get a wage rise - even if it's just in line with inflation - will end up paying more in income tax because they're drawn into a higher tax bracket.
- The pensions lifetime allowance and the thresholds for capital gains tax and inheritance tax will also be frozen. They'll all stay the same until April 2026 - which again will result in some paying more tax than they would have done had the thresholds risen with inflation. Full details see Other tax thresholds.
- The contactless payment limit will rise to £100. That's up from £45 and officially takes effect from today, though in practice it will take longer for retailers to implement the increased limit. See our Contactless limit raised MSE News story for more info.
- The Government will issue its first sovereign 'green' savings bond - though we don't yet know what interest rate it'll pay. We have very limited detail on this at the moment, though we know it'll launch this summer. See our Green Savings Bond guide for what we know so far.
- Alcohol and fuel duty will be frozen. This is the second year in a row that alcohol duty has been frozen, while fuel duty has been frozen for over a decade.
- The 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months. It will now last until the end of September, with an interim rate of 12.5% for another six months after that.
- A new Restart Grant will launch in April to help businesses. These will be available in England and will be worth up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
- A Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million. This will launch on 6 April and will be open to all businesses, including those who have already received support under the existing coronavirus guaranteed loan schemes.
- Some air passenger duty rates will increase from April 2022. Air passenger duty is the tax charged on outbound flights - you don't pay it directly but it's part of the overall fare you pay. Long-haul air passenger duty rates will increase in line with the retail prices index (RPI) measure of inflation - for economy flights that means a £2 rise, for premium economy, business and first class flights a £5 rise. There's no rise for short-haul economy flights but those travelling long-haul by private jets will see the rate increase by £13.
- A no-interest loans scheme will be piloted. The Government will provide up to £3.8 million of funding to deliver a pilot no-interest loans scheme. The scheme will help vulnerable consumers who would benefit from affordable short-term credit to meet unexpected costs, as an alternative to relying on high-cost credit.
On Thursday 4 March you can watch MoneySavingExpert.com founder Martin Lewis quiz the Chancellor in his Budget Special for The Martin Lewis Money Show (ITV, 8.30pm).
Budget 2021: Key stories at a glance
- Self-employed support and furlough extended
- New mortgage scheme for buyers with 5% deposit
- Stamp duty holiday extended in England and Northern Ireland
- Income tax thresholds frozen - meaning many will pay more
- Universal credit £20/week uplift to continue for a further six months
- Green Savings Bond to launch via NS&I
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