Today chancellor Rishi Sunak announced his second budget, a year since delivering his first budget which outlined the government’s response to Covid-19 when the pandemic was still believed to be a temporary hiccup. In this budget, the chancellor acknowledged the need to continue to protect jobs and do “whatever it takes” by introducing extensions to many of his support schemes and introducing new incentives to kickstart the economy. Many have touted it a ‘spend now tax later’ budget.

Kicking off with the furlough scheme, it was extended for the third time running with the deadline for the same now being the end of September 2021. Albeit the terms of the furlough will undergo changes for the months of July and August, September as employers will be asked to pick up 10% and 20% respectively of the unpaid hours of the employees. Similarly, the self-employed income support grant will also be extended until the end of September with a 4th and 5th grant expected to cover 80% of average trading profits for the appropriate 3 month period which each of the grants will cover.

In order to spur investment into the UK economy, businesses will also, in effect, be allowed to deduct 130% of their investment from taxable income which should engender savings worth 25p to the £.In addition, the reduced rate of VAT from 20% to 5% for the leisure and hospitality industry will also continue to apply till September to cushion the blow for one of the worst-affected industries. Following this, the rate of VAT will only rise to 12.5% until April 2022, meant to encourage individuals to purchase these services and dine outdoors whilst making the services more affordable. Furthermore, a £5bn Restart grant has also been unveiled for the high street with business rates holidays set to continue until September 2021. The culture and arts industry were also awarded £700 million of new funding with businesses across all industries given the chance to claim £3000 for hiring an apprentice aged 25 or above.

Existing and prospective homebuyers can rejoice at the extension of the stamp duty holiday until June 30, beyond which the holiday will continue but the threshold of the property value will be halved from £500,000 to £250,000 until September 2021.

Yet, the need to stabilise public finances didn’t escape the Chancellor’s sight as Cheylesmore Accountants correctly anticipated increases in corporate tax from the existing rate of 19% to 25%, but these will kick in from 2023 onward. This was meant to allow the economy to recover to start taxing again with Sunak acknowledging the long-term damage wrought by Covid-19 was likely to scar the UK economy until 2026 and that it would be the task of multiple governments to fix the damage. Allowances relating to personal tax, pensions lifetime and capital gains were frozen as well.

Overall, the government is expected to incur an eye-watering bill of £407bn over the two years to tackle the initial impact of Covid-19 and borrowing are expected to £355bn this year and £255bn in 2022.

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