The Cost of Coronavirus
Total Covid support package costs this year and next is £352bn, the chancellor says.
Sunak says the response to the pandemic has been one of the largest and most sustained the country has ever seen.
Extension to Furlough and Income Support Schemes
The chancellor says unemployment will peak at 6.5%, down from a forecasted peak of 11.9% last July. That means 1.8 million fewer people are expected to be out of work than previously thought, he says.
Sunak confirms the extension of the furlough scheme until the end of September, as previously announced late on Tuesday.
Employees will continue to receive 80% of their wages until the scheme ends, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out.
Sunak also confirms the self-employment income support scheme has also been extended. The fourth grant will cover February to April, worth 80% of average trading profits up to £7,500.
The £20-a-week uplift in universal credit is extended for six months.
The chancellor confirms the £5bn restart grant for businesses to help companies get going after lockdown.
He says total direct cash support to businesses has reached £25bn.
As the government-backed bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS) come to an end, the Treasury is launching a new loan scheme to run until the end of the year. Loans can be between £25,000 and £10m.
Hospitality and leisure businesses pay no business rates for three months, then rates will be discounted for the remaining nine months of the year by two-thirds, in a £6bn tax cut.
5% reduced rate of VAT will be extended until the end of September. Then it will be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022. Sunak says this is a cut worth £5bn.
Sunak announces the stamp duty holiday will be extended.
As expected, stamp duty holiday on properties up to £500,000 continues until the end of June. It will be kept at double its standard level until the end of September, and then return to usual levels from 1 October.
The chancellor confirms a mortgage guarantee to help first-time buyers access 95% mortgages.
Tax Thresholds Frozen
The chancellor says the government will take a “fair” approach to “fixing the public finances”.
The government will not raise national insurance, income tax or VAT, but will freeze personal tax thresholds – as anticipated.
The personal allowance will remain at £12,570 until 2026. The higher-rate threshold will increase to £50,270 next year, and also remain at that level.
The inheritance tax threshold, pensions lifetime allowance, annual exempt allowance from capital gains tax and VAT exemption threshold will also be frozen.
Corporation Tax Increase
In April 2023, the rate of corporation tax will increase to 25%. Sunak says this will be the lowest rate in the G7.
Sunak says businesses will only be impacted if they are making profits, and the change will only come in once the OBR forecasts the economy will be recovering.
The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.
“It’s a tax rise on company profits, but only on the larger more profitable companies, and only in two years’ time,” Sunak says.
The government is investing £25bn by allowing a 130% super-deduction on tax for investments made by companies. This means firms can cut their taxes by up to 25p for every pound they invest.
Alcohol duties will be frozen for the second year in a row.
Fuel duty will also be frozen.
Investment in Green Initiatives
The chancellor announces the new national infrastructure bank will open in Leeds with £12bn capitalisation from the government.
Green projects will be supported through a green recovery bond.
The chancellor says the Treasury will reform the Bank of England’s mandate to include targeting net zero, in addition to the existing 2% inflation target.
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