Rishi Sunak’s big numbers Budget doing ‘whatever it takes’ to support the economy and lay the foundations for the future, or simply ‘papering over the cracks’?

With the Treasury having leaked like a sieve in the run-up to this undeniably significant Budget, there were few surprises. The main announcement most were waiting for was that support for businesses and jobs would continue – at least for the next few months while the country takes its steps to open up after lockdown. Whilst this had reached the headlines prior to the Budget speech, it’s always nice to have confirmation.

The Office for Budget Responsibility’s (OBR) forecasts were slightly better than anticipated, predicting a swifter and more sustained recovery than they had last autumn, and anticipate the economy to have recovered to a pre-Covid level by the middle of 2022.

Perhaps the most significant announcement was the confirmation that Corporation Tax will increase to 25% from April 2023. Speculation had been rife that it could rise from anywhere between the current 19% and 25%. Theatrically, the Chancellor let the gasps die away before clarifying how that would work: businesses with profits up to £50,000 would continue to pay 19%, then a tapering would apply to businesses with profits of between £50,000 and £250,000. The full 25% tax rate will apply to businesses with profits above this.

Announcing that the government is also investing £25bn by allowing a super-deduction of 130% on tax for investments made by companies over the next two years, that could net them a tax cut of up to 25p in every invested pound, alongside the Corporation Tax hike no doubt softened the blow for large businesses and put the message that Britain remained open for business upfront.

In addition there were announcements that would ‘change the economic geography’ of the country, such as locating a UK infrastructure bank in Teesside, investing in green industries all over the UK and announcing a new green bond as a retail savings product. Eight new free ports were also announced, covering multiple regions round the country and a Treasury campus to be opened in Darlington.

The Chancellor also confirmed that all announcements applied to all four nations in the union.

Criticism from opposition parties focused on the lack of planned support for social services, the NHS, and that there was no mention of the Brexit deal and its impact on the economy. Labour leader, Sir Keir Starmer called the Budget ‘a quick fix … it’s not levelling up, it’s giving up’.

Whether these issues get addressed as time moves on remains to be seen but it’s clear that with statements like ‘acute damage by Covid’, despite the unleashing of the ‘fiscal firepower’ today, there will no doubt be more pain to come – hopefully alongside continuing support for those who most need it. But for now, there’s a small collective sigh of relief that we’ve not quite reached the cliff edge.

Here’s a summary of the key announcements that affect you and your money:

• Income tax: For 2021/22 Personal Allowance increasing to £12,570, basic rate band to £37,700 meaning a higher rate threshold of £50,270 – but then these figures will be frozen until April 2026. No changes to dividend allowance, personal savings allowance, starting rate band for savings.
• Pensions: Lifetime allowance for pensions frozen at £1,073,100 until April 2026. No changes to annual allowance, money purchase annual allowance or tapered annual allowance figures or rules.
• Capital gains tax annual exempt amount frozen at £12,300 until April 2026. No change to the tax rates for CGT.
• Inheritance nil rate band frozen at £325,000 and residence nil rate band at £175,000 until April 2026 (and the residence nil rate band taper threshold remains at £2 million until April 2026).
• ISA subscription limit remains at £20,000 in 2021/22 and the Junior ISA and Child Trust Fund subscription limits remain at £9,000.
• Corporation tax: In 2023 the main corporation tax rate will increase to 25% but for companies with profits of no more than £50,000 the rate will remain at 19%. There will be a tapering of the rate for companies with profits over £50,000 but less than £250,000 so only companies with profits above £250,000 will suffer the full 25% rate.
• Fuel duty and alcohol duties are frozen.
• Coronavirus Job Support Scheme extended to September 2021 across the UK (employer contribution of 10% required in July and 20% in August and September).
• Self Employment Income Support Scheme (SEISS) extended to September 2021 across UK, with those who filed a tax return in 2019/20 now being able to claim for the first time.
• Stamp Duty Land Tax (SDLT) temporary cut in England and Northern Ireland extended until September 2021. The £500,000 nil rate band will be extended until 30 June 2021 then it will be set at £250,000 until 30 September 2021 returning to its standard level of £125,000 on 1 October 2021.
• New mortgage guarantee scheme to enable all UK homebuyers to secure a 95% mortgage on properties up to £600,000 – only a 5% deposit needed.