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Budget 2021: Key points for businesses at-a-glance

Economic and fiscal context:

  • COVID-19 has had a profound effect on the UK economy. As the pandemic hit, the UK entered its first recession in 11 years
  • As a result of the pandemic, borrowing reached 16.9% of GDP in 2020-21, the highest level of peacetime borrowing on record, and underlying debt will peak at 97.1% in 2023-24
  • The UK economy shrank by 10% in 2020
  • The economy is forecast to rebound in 2021, with predicted annual growth of 4% this year. A return to pre-COVID levels is expected by the middle of 2022, with growth of 7.3% next year

Protecting the jobs and livelihoods of the British people:

  • The furlough scheme will be extended until the end of September 2021. The Government will continue paying 80% of employees’ wages for hours they cannot work. Employers will be asked to contribute 10% in July and 20% in August and September
  • Support for the self-employed will continue with a fourth grant covering February to April 2021, and a fifth grant from May 2021. With the tax return deadline passed, 600,000 more people, many of whom became self-employed last year, can now claim the fourth and fifth grants
  • The apprentice incentive payment the Government give businesses is doubling to £3,000 –for all new hires, of any age

Backing Businesses:

  • From April, Restart Grants will be available to help businesses reopen and get going again. Non-essential retail businesses will open first, so they will receive grants of up to £6,000. Hospitality and leisure businesses will open later in the year, or be under more restrictions, so they will receive grants of up to £18,000
  • An additional £425m of discretionary business grant funding is now available
  • £300m additional funding for the Culture Recovery Fund to support the arts, culture and sporting institutions as they reopen, this fund is open now
  • From April, a new Recovery Loan Scheme will provide businesses of any size loans from £25,000 up to £10m, through to the end of this year
  • The 100% business rates holiday will continue until the end of June 2021. For the remaining nine months of the year, the Government are cutting business rates by two thirds
  • The 5% reduced rate of VAT for hard hit sectors has been extended for six months, then an interim rate of 12.5% will begin on 1st October 2021 until returning to normal in April 2022
  • In 2023 the rate of corporation tax, paid on company profits, will increase to 25%. To protect small businesses a Small Profits Rate maintained at 19% will be in place for businesses with profits of £50,000 or less. A taper will ensure that businesses only start paying the full rate on profits from £250,000. In total only 10% of companies will pay the full rate
  • For the next two years, when businesses invest in new equipment, they can offset all of the costs against tax, plus an additional 30%. The Government are calling this The Super Deduction

Innovation, Environment and Infrastructure:

  • A new UK Infrastructure Bank will be set up in Leeds. This new bank will have £12bn in capital, with the aim of funding £40bn worth of public and private projects
  • The Future Fund Breakthrough will fill the scale-up funding gap for innovative technology businesses with high R&D-intensity. It is estimated that 1% growth in these firms could boost the UK economy by £38bn
  • £15bn will be available in green bonds, including for retail investors, to help finance the transition to net zero by 2050
  • New visa reforms aimed at highly skilled migrants, including a new unsponsored points-based visa to attract the best and most promising international talent in science, research and tech and a new improved visa process for scale-ups and entrepreneurs
  • Two new Help to Grow programmes will commence by the autumn. Help to Grow: Management will help thousands of SMEs get world-class management training. Help to Grow: Digital will help SMEs develop digital skills with free expert training and a 50% discount on new productivity-enhancing software
  • £1bn fund to promote regeneration in a further 45 English towns, including Middlesbrough, Preston, Swindon, Bournemouth, Newark, West Bromwich and Ipswich
  • The first eight sites were announced for freeports in England: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside. Freeports are secure customs zones located at ports where business can be carried out inside a country’s land border, but where different customs rules apply


  • Minimum wage to increase to £8.91 an hour from April 2021
  • The Government are not raising the rates of income tax, national insurance, or VAT. Next year, the threshold will increase to £12,570 but it will then be frozen until April 2026
  • Contactless payment limit will rise to £100 later this year
  • Fuel duty to be frozen for the eleventh consecutive year