Winners and losers in Sunak balancing act
TAXES RISE IN REAL TERMS BUT HELP AT HAND FOR WORSE OFF
CHANCELLOR Rishi Sunak confirmed that a £20-a-week increase in Universal Credit is to be extended for another six months, as he delivered his Budget statement.
He also confirmed the furlough scheme will continue to September, with people receiving 80% of their wages if they cannot work.
But income tax will increase in real terms for working people even on modest salaries – with rises continuing until 2026.
And there will be a major increase in corporation tax paid by the largest and most profitable businesses.
Speaking in the House of Commons, Mr Sunak warned: “Our borrowing is the highest it has been outside of wartime.” And it will take “many decades” to pay the money back.
He said he was forced to increase taxes because coronavirus and lockdowns had caused “acute” damage to the economy.
The Government was spending £407 billion in support for jobs, businesses and families over two years, he said. And in this Budget alone, he was announcing an additional £65 billion.
At the same time, the economy has shrunk by over 10%, “the largest fall in over 200 year.”
The income tax threshold will rise to £12,570 next year, and then will be frozen until April 2026.
While nobody’s take-home pay will be cut, it does mean the tax paid by most working people will increase every year. Wages will rise as a result of inflation, but because the tax threshold is frozen, people will pay more tax.
The threshold for paying the higher 40% rate of income tax will be £50,270 next year, and will also be frozen until 2026.
In 2023, the rate of corporation tax paid on company profits currently 19%, will increase to 25%. Mr Sunak said the UK would still have the lowest corporation tax rate of the major economies.
But smaller businesses, with profits below £50,000, will still pay the 19% rate. And the rate will then increase based on profits, so only firms with profits above £250,000 will pay the full 25% rate.
This means there will be a significant increase in corporation tax, but only for the largest and most profitable businesses.
KEY ANNOUNCEMENTS INCLUDED: UNIVERSAL CREDIT
The Universal Credit uplift of £20 a week will continue for a further six months, “well beyond the end of this
national lockdown”, said Mr Sunak.
Equivalent support for working tax credit claimants, who will get a one-off £500 payment.
He highlighted an announcement previously made that the National living wage to rise to £8.91 from April.
EXTENDING THE FURLOUGH SCHEME
The furlough scheme, officially known as the Job Retention Scheme, is to be extended until September.
It means the Government will continue subsidising the wages of people throughout the roadmap for ending lockdown, and beyond. The Government hopes to end the final stages of the lockdown on June 21.
Employees will continue to get 80% of their wages. But businesses will be asked to make a contribution from July.
The Government will ask for a contribution of 10% in July and 20% in August and September towards the hours their staff do not work.
Mr Sunak also announced more than 600,000 people, many of whom became self-employed in 2019-20, will now be able to claim direct cash grants under the Self-Employment Income Support Scheme (SEISS).
The economy is expected to return to its pre-Covid level by the middle of next year. This is sooner than previously thought. But despite this, the Office for Budget Responsibility believes that in five years time, the economy will still be 3% smaller than it would have been without coronavirus.
HELP FOR EMPLOYERS AND JOBSEEKERS
A “plan for jobs” will include £126 million of new funding for 40,000 more traineeships, and giving employers a £3,000 cash payment for every new
apprentice they take on. A £5 billion ‘Restart Grant’ scheme will help firms in retail, hospitality, accommodation, leisure and personal care get back on their feet as the lockdown ends and they are allowed to re-open.
A £520 million ‘Help to Grow’ fund for smaller businesses will provide world-leading MBA style management training, expert technology advice and discounted software.
A £300 million sports recovery package will help sports clubs get back on their feet, with spectators due to return to grounds as lockdown ends. The Chancellor, a cricket fan, has said English cricket is one of the sports expected to benefit.
The Chancellor gave museums, theatres and galleries in England an extra £408m package of financial support so they can move towards reopening.
And he announced the legal limit on contactless payments will more than double to £100, in a move he said would help retailers.
HELP FOR HOME-BUYERS
A new mortgage guarantee scheme was announced. First-time buyers or current homeowners looking to buy a house of up to £600k will need a deposit of just 5% to secure a mortgage. Under this scheme, the Government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.
Cuts to stamp duty will be extended.
CRACKING DOWN ON COVID FRAUD
A new £100m taskforce will be introduced to crack down on Covid fraudsters. The Taxpayer Protection Taskforce will be staffed by more than 1,250
HMRC operatives responsible for investigating and combatting those who have sought to fraudulently claim taxpayer’s money through schemes such as furlough and the Self Employment Income Support Scheme.
BILLIONS OF POUNDS FOR ‘GREEN’ POWER AND TRANSPORT
Billions of pounds will be offered to help fund infrastructure projects. The Chancellor announced an initial £12 billion of capital and £10 billion of government guarantees for the UK Infrastructure Bank. The Bank will offer a range of products, including equity, loans and guarantees, to help private businesses find major infrastructure projects, in sectors such as renewable energy, carbon capture and storage and transportation.
SAVING LOCAL PUBS
A £150 million Community Ownership Fund will provide community groups with grants of up to £250,000 – or £1 million in exceptional cases – to buy struggling local facilities such as a pub or sports club.
CASH FOR PEOPLE IN NEED
The Thalidomide Health Grant, currently due to run until April 2023, will be made permanent. It has been providing support since April 2013, and currently helps more than 400 people in the United Kingdom through direct cash grants to help access personalised specialist care, rehabilitation and treatment.
There was £10 million in new funding to support veterans with mental health needs.
Fuel duty will be frozen at the current rate of 58p per litre.
AN investigation is under way following a suspected hit-and-run in Newcastle involving an e-scooter.
Shortly before 11pm on Monday, police received a report that a car had been in collision with an e-scooter on Osborne Road in Jesmond.
It was reported that the rider was travelling north along the road when, for reasons yet to be established, a silver Skoda Fabia collided with the scooter.
The 19-year-old male rider had to jump from the scooter to avoid injury.
The driver of the Skoda left the scene without exchanging details and before emergency services had arrived, officers say.
An investigation has been launched into the incident, and police have since located the Skoda believed to have been involved which had been left abandoned nearby.
Sergeant Dave Roberts, of Northumbria Police’s Motor Patrols department, said: “This was a serious incident that could have easily caused the rider to sustain significant or potentially fatal injuries.
“Thankfully that wasn’t the case on this occasion and the rider was able to jump from the scooter before the point of impact, but that is down to sheer luck.
“The vehicle involved did not stop and had left the scene before police arrived...
“This happened on a busy, residential street so we believe somebody will have seen what happened.
“A number of drivers were in the area at the time so we would also ask you to check any dashcam footage and let us know if you see a silver Skoda which matches our description.”
Anyone with information is asked to contact police via the ‘Tell Us Something’ page of their website or by calling 101 quoting log 1151 010321. Alternatively, you can pass on information to independent charity Crimestoppers anonymously on 0800 555 111.