Who would put themselves in the shoes of Rishi Sunak? The Chancellor set out the nation’s spending plans by the billions as the pandemic enters a second year. We won’t cover all of the details here as we’re sure you’ve heard them on the news, but we have curated a selection of items we think are most relevant to you.
- ISA and Junior ISA annual subscription remain at £20,000 and £9,000 respectively
- Green savings – the government will issue a ‘green gilt’ bond and a green savings product through National Savings & Investment this summer
- Pension Lifetime Allowance to be frozen at £1,073,100
- Announcements made in relation to pensions having more flexibility to invest into innovative new ventures – with details to follow
- No changes to rates of income tax, national insurance or VAT
- From 2022-2026, Personal income tax allowance to be frozen at £12,570, and Higher rate income tax threshold to be frozen at £50,270
- Stamp Duty freeze extended for a further 3 months in England and Northern Ireland, followed by a £250,000 rate until the end of September, when it will then return to the usual level of £125,000
- Corporation tax on company profits to rise from 19% to 25% in April 2023, with taper rate to be kept at 19% for smaller companies
- Business rates holiday for firms in England continue until June
- Furlough extended to the end of September, but employers to be asked to contribute 10% in July and 20% in August and September
- Self-employed workers see an increase of eligibility and a variety of grants open to them
- National living wage to increase to £8.91 per hour from April
- Fuel duty frozen
- Alcohol duty frozen
- Recovery packages for the arts and sports
This is an ambitious budget, but not without questions about public spending and the burden local authorities will face and the future of universal credit which has become the lifeline for many of the circa 1.74m unemployed people (roughly 5.1% unemployment rate according to the Office for National Statistics). 18–24-year-olds are particularly hard hit, so the increase in incentive grants for apprenticeships (a rise to £3,000, and £123 for traineeships) is good news.
Though the economy is predicted to grow by 4% this year, after a 10% decline in 2020, all eyes are on 2022 when expansion is set to be 7.3% according to the Office for Budget Responsibility (OBR), with modest growth of 1.6-1.7% in subsequent years.
The cost of goods is set to rise with inflation predicted at 1.5% this year and 1.8% in 2022, which is still less than the Bank of England predicted.
So at this stage there is nothing too concerning for those who hold investments and pensions and we sincerely hope that come the summer you will be able to resume your normal lifestyle and be one of the households that is predicted to ‘treat themselves’ when the economy opens up.
If you’re concerned about how the budget changes might affect you, please do give us a call. We’re here to support you.