What Budget 2021 means if you live in Wales
Many of Rishi Sunak's announcements only apply to England - here are the ones you need to know about
The Chancellor Rishi Sunak has announced this year's UK government budget for 2021.
In his speech, which you can see live updates from here, he revealed the UK government's cost of fighting coronavirus would hit £407bn this year.
Although he forecast a quick return to growth later this year, he warned that the impact on the economy would be felt for years and the effect on the public finances would last decades.
His announcement contained a number of measures to continue that coronavirus support over the coming year - but also to start paying the bill. Many of these changes will hit your pocket.
Some of the announcements he made cover issues that are controlled by the Welsh Government and Mr Sunak's announcements only applied to England. However Wales will receive a proportion of that money and the UK Treasury has announced there will be an a additional £740m available through the Barnett formula next year.
We have gone through the Chancellor's announcement to see what applies to Wales and what does not.
Business rates holiday - England only (but Wales has announced its own plan)
The business rates holiday in England has been extended by an additional three months. That means 750,000 retail, hospitality and leisure properties in England will pay no business rates for three months from April 1 when combined with small business rates relief, with further relief available for the rest of the year.
Business rates in Wales are devolved to the Welsh Government and today Finance Minister Rebecca Evans also announced a 12-month extension.
The £380m package provides retail, leisure and hospitality businesses with rateable values up to £500k, and charities in Wales with a straightforward year-long rates holiday – going beyond what has been announced in England – providing a much-needed boost for small and medium sized businesses struggling to cope with the impacts of the pandemic.
Mortgage Guarantee Scheme - includes Wales
The government has announced a new mortgage guarantee scheme which will increase the availability of 95% loan-to-value mortgage products, enabling more households to access mortgages without the need for prohibitively large deposits.
The aim is to help first time buyers onto the property ladder.
You can find more details here.
Extension in Stamp Duty tax cut - England and Northern Ireland only (but Wales has made its own announcement.
Chancellor Rishi Sunak announced an extension to the temporary cut in Stamp Duty till September.
Stamp duty does not exist in Wales and we instead have Land Transaction Tax which is run by the Welsh Government.
Earlier in the crisis the Welsh Government temporarily increased the nil rate band for residential property transactions but this was set to end on March 31 and revert to the original rates and starting threshold of £180,000.
Today Finance Minister Rebecca Evans confirmed that the Land Transaction Tax temporary reduction period will be extended by a further 3 months so that it will end on 30 June 2021. Until then, there will be no tax payable on property sales below £250,000.
Income tax thresholds frozen - includes Wales
People on low incomes face being dragged back into paying tax as wages increase after Rishi Sunak announced a freezing of the threshold where people pay tax.
The point at which people begin paying income tax will increase by £70 to £12,570 in April, but will be maintained at that level until April 2026.
The 40p rate threshold will increase by £270 to £50,270 and will then be frozen.
Mr Sunak said "nobody's take-home pay will be less than it is now, as a result of this policy", but he acknowledged it "does remove the incremental benefit created had thresholds continued to increase with inflation".
Restart grants - England only
The Chancellor announced his speech £5 billion for new restart grants to help businesses reopen after lockdown.
These are essentially a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses. This will only apply in England.
Recovery Loan Scheme - includes Wales
A new Recovery Loan Scheme will make available loans between £25,001 and £10 million and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
Once received, the finance can be used for any legitimate business purpose, including growth and investment.
The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.
What type of finance is available:
Term loans and overdrafts will be available between £25,001 and £10 million per business.
Invoice finance and asset finance will be available between £1,000 and £10 million per business.
Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
This is available to businesses in Wales and you can find more details here.
Domestic abuse support funding - includes Wales (in part)
The Chancellor announced £19 million to tackle domestic abuse in England and Wales.
Of this £15 million in 2021-22 across England and Wales will be to increase funding for perpetrator programmes that work with offenders to reduce the risk of abuse continuing.
£4 million between 2021-22 and 2022-23 will be to trial a network of respite rooms but this only applies to England.
This money comes on top of the £125 million announced at spending review 2020 for local authorities to deliver the Domestic Abuse Bill’s new statutory duty to support victims.
Furlough - includes Wales
Wales has been more reliant on furlough than any other part of the United Kingdom because we have a high proportion of manufacturing jobs.
In the budget Mr Sunak announced that the furlough scheme will be extended until the end of September.
In July, employers will be expected to contribute 10%, increasing to 20% in August and September, as the economy reopens. Employees will continue to receive 80% of their salary for hours not worked until the scheme ends.
For workers the terms will not change.
Increase in the living wage - includes Wales
Basic rate workers will get a 2.2% increase, Rishi Sunak said, with the National Living Wage rising to £8.91 an hour.
The UK Government's highest rate will also include those aged 23 and over - workers who previously fell under the lower wage bracket.
This means 23 and 24-year-olds who are currently on £8.20 an hour will see their pay jump by 71p to £8.91 next month. However, the increase is a U-turn on the 49p an hour promised last March.
It equates to a pay rise of just 19p an hour for basic-rate workers.
Universal Credit and Working Tax Credit payments- includes Wales
There will be a six month extension of the £20 per week Universal Credit uplift in England, Scotland, Northern Ireland and Wales.
A one-off payment of £500 will also be paid to to eligible Working Tax Credit claimants across the UK.
Corporation tax rise - includes Wales
In order to try and balance the stretched public finances the rate of Corporation Tax will increase to 25%. The Chancellor repeatedly stressed that this would mean the UK's rates remain the lowest rate in the G7.
The increase will not take effect until 2023. Businesses with profits of £50,000 or less (around 70% of actively trading companies) will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
If you would like more details or would like to chat about anything listed above.
Please feel call us on 01970 636 000 or email sales@alexanders-online.co.uk
Take care,
The Alexanders Team.