Chancellor Rishi Sunak has today set out plans to freeze income tax thresholds and also increase corporation tax to help boost the UK’s finances following the coronavirus crisis.
Mr Sunak also set out plans for a £65 billion package of spending to help support the economy as it recovers from the pandemic.
There was a freeze announced on alcohol duty for the second year in a row and planned increases in duties for spirits such as Scotch whisky, wine, cider and beer, will also be cancelled.
Speaking in the House of Commons Mr Sunak said: “All alcohol duties frozen for the second year in a row – only the third time in two decades.
“And right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel. So the planned increase in fuel duty is also cancelled.”
Coronavirus support
- The Universal Credit uplift of £20 a week will continue for a further six months, well beyond the end of this national lockdown.
- The furlough scheme will be extended to the end of September, as will support for the self-employed.
- The Chancellor confirmed an additional £1.6 billion for the coronavirus vaccine rollout and to “improve future preparedness”.
- The business rates holiday for the retail, hospitality and leisure sectors will continue until the end of June, and will be discounted by two thirds for the remaining nine months of the year.
- The 5% reduced rate of VAT for the tourism and hospitality sector will be extended for six months to the end of September, with an interim rate of 12.5% for another six months after that.
- The stamp duty cut will continue until the end of June, with the nil rate band set at £250,000 – double its standard level – until the end of September.
- A new restart grant will start in April to help businesses reopen, with £5 billion of funding.
Taxation
- Personal tax thresholds will be frozen from April 2026.
- Rates of income tax, national insurance and VAT kept at the same level
- The rate of corporation tax, paid on company profits, will increase to 25% in April 2023, however small businesses with profits of £50,000 or less will continue to be taxed at 19%.
- There will be a “super deduction” for companies when they invest, reducing their tax bill by 130% of the cost for the next two years.
Other announcements
- The minimum wage will increase to £8.91 an hour from April.
- On apprenticeships, the Government is to double the incentive payments given to businesses to £3,000 for all new hires, of any age.
- All alcohol duties are frozen for the second year in a row and the planned increase in fuel duty is also cancelled.
- A “mortgage guarantee”, with lenders who provide mortgages to homebuyers who can only afford a 5% deposit benefitting from a Government guarantee on those mortgages.
