Continued support during the pandemic was, unsurprisingly, the main focus of Rishi Sunak’s Budget Statement on 3 March, in what continues to be an exceptionally challenging time for all global economies.
The Chancellor proclaimed that he would “continue doing whatever it takes” by outlining a three-point plan offering support for jobs and businesses, fixing finances, and charting economic rebound, which he anticipated will be “swifter and more sustained” than previous expectations.
He revealed the UK medium-term economic outlook from the Office for Budget Responsibility (OBR). Over the remainder of 2021, a strong economic rebound for the UK is forecast, as restrictions ease and allow economic activities to resume. The OBR forecasts that growth will moderate towards the end of 2021 and output will return to its pre-pandemic level in mid-2022, six months earlier than previous predictions, reflective of the faster rollout of the vaccination programme.
The Chancellor was left with little room for manoeuvre when it came to taxation, as the Conservative manifesto pledged not to alter Income Tax, National Insurance or VAT, so some key tax thresholds will now be frozen. For example, the Personal Allowance has risen with inflation for 2021-22 as planned, to £12,570, before 20% Income Tax becomes payable, and the higher rate threshold, at which people start to pay tax at 40%, has risen to £50,270, but then both thresholds will be frozen at these levels until April 2026. Similarly, tax thresholds for the pension Lifetime Allowance, Inheritance Tax and the annual exemption for Capital Gains Tax will be frozen until 2026.
In other Budget news – the Treasury has announced plans to launch a ‘green savings bond’ later this year through National Savings & Investments (NS&I). The investment will allow UK savers to invest in green projects. Funds raised will be earmarked for projects such as renewable energy and clean transport. Full details of the bond are yet to be revealed.