The 2021 Budget has finally been revealed.
Following on from the government’s roadmap to ease lockdown restrictions, Chancellor Rishi Sunak outlined a number of initiatives to help the economy recover from the impact of COVID-19. This includes extending a range of COVID support measures, as well the introduction of programmes designed to help certain ailing sectors get back on their feet.
But what does it mean for UK workers? And how will the 2021 Budget affect you?
Here’s everything you need to know:
Extension of the furlough scheme
One of the main announcements made for UK workers was the decision to extend the Coronavirus Job Retention scheme until the autumn.
Introduced at the beginning of the COVID-19 crisis, and aimed at keeping as many people in work as possible, the scheme was originally designed to end in October 2020. However, 4.7 million people are still furloughed across the UK which has led to the Chancellor extending the scheme until the end of September 2021.
As a result, the government will continue to pay up to 80% of wages, capped at a total of £2,500 per month. Employers will need to contribute from July, starting at 10% and increasing to 20% in August and September, as the economy begins to recover.
COVID-19 and work
Furlough: What you need to know
Self-employment grant continuing
The main takeaway for self-employed workers is that a fourth (and eventually a fifth) grant will be introduced to help cover their loss of earnings.
The Self-Employment Income Support Scheme (SEISS) has already helped more than two million people over the last year – and has been extended by a further six months.
Terms are unchanged from the previous three grants, meaning you can claim up to 80% of your monthly trading profits for a period of three months (capped at £7,500).
The fourth grant will cover the period of February to April 2021, while the fifth and final grant will be available from May onwards. For the fifth grant, the system will be open for claims in late July.
More apprenticeships being encouraged
There was more good news for anyone looking to take an apprenticeship.
Businesses continue to be encouraged to hire apprentices throughout 2021, with cash incentives for doing so being increased until the end of September. Companies will now receive £3,000 (previously £2,000) for each apprentice they employ, regardless of age.
This may mean more apprenticeships will be on offer throughout the year, with opportunities for all ages and experience levels.
View all available apprenticeships
Universal Credit uplift
A £20 a week increase to Universal Credit was first introduced in April 2020 to help support those who are currently out of work.
Like the furlough scheme, this increase has now been extended by a further six months – meaning those who claim Universal Credit will be eligible for the increased amount until the end of September.
Out of work checklist: things to do if you lose your job
National Living Wage increase
To support getting people into well-paid jobs, the Chancellor announced that the National Living Wage will rise to £8.91 from April 2021.
It will also be made available to those aged 23 and above, down from the previous age of 25.
What is the National Living Wage
Taxes paid by workers remain unchanged
The Chancellor confirmed in the Budget that the rate of corporation tax paid by businesses with profits over £250,000 will rise from 19% to 25% by 2023.
However, personal tax rates remain unchanged, and there are no increases planned when it comes to income tax, VAT and National Insurance.
Tax codes explained
Investment in infrastructure
Beginning this spring with an initial investment of £12bn, the new UK Infrastructure Bank will help to provide financing for key infrastructural projects in both the public and private sectors, particularly in the North of England and the Midlands – potentially creating thousands of jobs in the process.
What else was covered?
Other announcements the Chancellor made which could affect UK workers included:
- Tax cuts – The current VAT cut for hospitality and leisure firms, as well as the business rate relief holiday, have also been extended until June. After this, business rates will still be capped for the rest of the year by two-thirds. Previously due to end on 31st March, these measures will help a number of retail and hospitality businesses get back on their feet, and ease some of their financial burden as they begin welcoming customers back through their doors.
- High Street grants – A further £5bn is being pledged to help high street businesses that were forced to close during lockdown. The worst-hit (such as those in hospitality) will be able to claim up to £18,000 as part of the scheme, whilst non-essential retailers could receive grants of up to £6,000 each.
- Stamp Duty Holiday – As part of the Summer Budget, the threshold for paying Stamp Duty was raised from £125,000 to £500,000 until March 2021. This has now been extended until 30th June. The threshold will then drop to £250,000 until the end of September, to help smooth the transition (with the previous threshold being reintroduced from October). This will also be coupled with a scheme being launched in April to encourage lenders to offer 5% mortgages.
- Skilled worker visas – New unsponsored, points-based visas will allow businesses to fastrack hiring top talent from abroad. This will encourage highly skilled workers, such as scientists and engineers, to come to the UK for work.
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