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The Budget: The Headlines

Posted on Mar 03, 2021. by NTI

Rishi Sunak, in his short political career to date, has been all about the numbers. This afternoon you can afford to sit down with a drink to consider his spring budget 2021, as all of the planned increased duties on wine, spirits, beer and cider have been cancelled. You can even afford to drink and drive, as increases in fuel duty have been scrapped too.

However, the numbers are BIG. In his statement in the Commons 00 Sunak told us that our debt is set to peak at 97.1% of GDP in 2023-24, with unemployment peaking before that at 6.5 per cent. However, he gaveth as well as tooketh away, inexplicably saying that the UK economy is expected to return to pre-Covid levels by the middle of 2022, six months earlier than previously thought, based on the formation of Coco-Pops laying in the bottom of his daughter's breakfast bowl this morning.

Financial support to the world and his dog at this time of Coro ... blah, blah, blah is to increase by a further £65 billion, taking the overall total to a jaw-dropping £407 billion, roughly the GDP of Thailand (but they don't have our winters). What is this extra cash to be spent on?

Take a breath ...

The furlough scheme will continue until the end of September, those on Universal Credit will enjoy their extra £20 a week for another six months, there is a a one-off payment of £500 to working tax credit claimants, companies will be able to offset losses against their tax bills going back up to three years, allowing them to claim additional refunds of up to £760,000 (Neil? Neil ... where is he going?), the business rates holiday for retail, hospitality and leisure sector firms has been extended to the end of June and for the remaining nine months of the fiscal year they will still be discounted by up to two-thirds and there are £5 billion of new grants for hard-hit firms, worth up to £6,000 for non-essential retailers and £18,000 for restaurants, pubs, personal care and gym businesses which will reopen later this summer.

We only stop there because we ran out of commas and, unlike the largesse of the Government who just 16 months ago were scoffing at Labour claiming they would spend £7 billion renationalising our rail network, we know when to stop.

One of the nicest touches was in the confirmation that the Government will guarantee 95 per cent mortgages to help those who can only afford a 5 per cent deposit. "Oh, bugger it, why don't we give you the deposit too and pay for a sofa?," said Rishi, just before passing £50 to a passing 12 year old kid and asking him to get him a classic Magnum (and to keep the change).

The thresholds for inheritance tax, pensions lifetime allowance and capital gains tax thresholds were frozen, but the much-vaunted Corporation Tax rise to 25 per cent by April 2023 was announced. However, 70 per cent of companies - with profits of £50,000 or less - will still only be liable for the current 19 per cent rate, while only those with profits of £250,000 or more will pay the full 25 per cent.

If you had a client round to your virtual office this morning and gave them advice on potentially investing in another business you had better call them back in, as Mr Sunak also announced a "super-deduction" to incentivise business investment, which will mean such serial entrpreneurs can reduce their taxable income by 130 per cent of the amount they invest. 130 per cent? Surely that is almost all of it? If that investor was considering buying a local pub, theatre, shop or sports club that may have recently closed down, there is even a £150 million fund to help them take ownership.

But surely the biggest winner of all was Darlington. The Treasury and other key economic departments will set up a new economic campus there, with a £12 billion investment announced for lessons to help those shifted up north understand the local accent.

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