Chancellor Rishi Sunak has delivered the 2021 Budget, stating that he was prepared to do “whatever it takes” to help the UK financially during the pandemic, and that he would continue to do so.
During his speech, Sunak made announcements on Universal Credit, minimum wage, furlough, tax reduction and more - here’s everything you need to know about how the Budget could affect you.
£20 Universal Credit uplift extended
The Chancellor announced that the Universal Credit uplift of £20 per week will continue for a further six months - but it will be paid as a one off instalment of £500.
Sunak said: “We’ll provide Working Tax Credit claimants with equivalent support for the next six months.
“Because of the way that system works operationally, we’ll need to do so with a one-off payment of £500.
“And over the course of this year, as the economy begins to recover, we are shifting our resources and focus towards getting people into decent, well paid jobs.”
The increased payment had been implemented at the beginning of the pandemic, but was due to run out on 31 March. The Government had faced calls for the uplift to be extended prior to the 2021 Budget.
Minimum wage increase
Sunak also announced that the minimum wage will increase to £8.91 an hour from April, for workers aged 23 and over. The age threshold has been lowered from 25 to 23 and up.
As it stands, over 25s receive a minimum wage of £8.72 an hour, while minimum wage for those aged between 21 and 24 receive £8.20.
Under the new rules, those between 21 and 22 will receive a minimum of £8.36 from April, and those aged between 18 and 20 will get £6.56.
Minimum wage for under 18s will also increase to £4.62, and apprentices will receive £4.30.
On apprenticeships, Sunak said: “I’m doubling the incentive payments we give businesses to £3,000 - that’s for all new hires, of any age.”
VAT reduction extension
Sunak revealed that the Government’s VAT cut for the hospitality and tourism sectors will also be extended for six months, until the end of September.
The Chancellor said that 150,00 businesses employing 2.4 million people “need our support” to protect jobs as Covid-19 restrictions ease.
Sunak explained that even when the reduction runs out in September, the UK “won’t go straight back to the 20 per cent rate”.
He said: “We’ll have an interim rate of 12.5 per cent for another six motnsh, not returning to the standard rate until next year. In total, we’re cutting VAT next year by almost £5 billion.”
Sunak also added that the 100 per cent businesses rates holidays in England will continue from April until June, stating: “For the remaining nine months of the year, business rates will still be discounted by two-thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to say open. A £6 billion tax cut for business.”
For the remaining nine months of the year after June, Sunak said that the business rates holidays for the retail, hospitality and leisure sectors will continue to be discounted by two-thirds.
‘Freeze personal tax thresholds’
During the Budget speech, Sunak said that the Government will not raise the rates of income tax, national insurance or VAT.
He said: “Instead, our first step is to freeze personal tax thresholds.
“We will of course deliver our promise to increase it again next year to £12,570, but we will then keep it at this more generous level until April 2026.
“The high rate threshold will similarly be increased next year, to £50,270, and will then also remain at that level for the same period.”
Speaking to MPs, Sunak added: “Nobody’s take home pay will be less than it is now, as a result of this policy.
“But I want to be clear with all members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation.
“We are not hiding it, I am here, explaining it to the house and it is in the Budget document in black and white. It is a tax policy that is progressive and fair.”
Furlough scheme and support grants
It was announced that the furlough scheme would also be extended further as the pandemic continues across the UK.
Sunak said: “First, the furlough scheme will be extended until the end of September.
“For employees, there will be no change to the terms - they will continue to receive 80 per cent of their salary for hours not worked until the scheme ends.”
The Chancellor added that “support for the self employed” would also continue until September, with a fourth grant covering the period of February to April, and a “fifth and final grant” from May onwards.