The Great British Recovery - Budget Highlights

Rishi Sunak’s overall message is that “we will recover” and pledged he will do “whatever it takes” to help. Boris Johnson hailed it as a “Budget for recovery”.

Dated: 3 March 2021 Author: Adam Longmore, Tax Director

Set out below are some of the key points for businesses:

Coronavirus Support:

  • The furlough scheme will be extended until the end of September.
    • Employers will be asked to contribute 10% in July and 20% in August and September
    • A further 600,000 self-employed people will be eligible for help as access to grants is widened


  • Income tax rates set until 2026
    • On income tax, the threshold for paying the basic rate will rise to £12,570 next year
    • For higher-rate payers, the threshold will be £50,270
  • The VAT registration threshold will remain at £85,000 until 2024
  • Corporation tax on company profits will rise to 25% in 2023
    • The rate will however be kept at 19% for about 1.5m smaller companies with profits of less than £50,000
  • The chancellor announces the up-to-£500,000 "nil-rate band" for stamp duty will be extended until 30 June as planned and after this the nil rate band for stamp duty will be £250,000 for a further 3 months
  • No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances


  • Tax breaks for firms to “unlock” £20bn worth of business investment
  • Firms will be able to “deduct” investment costs from tax bills, reducing costs by 130%
  • Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships
  • Hospitality firms will still receive the benefits of a lower VAT rate of 5% until September
  • Interim 12.5% rate to apply for the following 6 months
  • Business rates holiday for firms in England to continue until June with 75% discount after that
  • £5bn in re-opening grants for non-essential businesses worth up to £6,000 per premises
  • New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
  • Contactless payment limit will rise to £100 later this year

Adam Longmore, Tax Director in our Derby office commented: “In recent times we have experienced support for internationally competitive corporation tax rates, and only have to go back just over 12 months to a time when we expected rates to reduce to 17%. The increase to 25% for more profitable companies, albeit only applying from April 2023 was arguably to be expected following the unprecedented support provided to companies throughout the crisis. “

“The increase to the headline tax rate was measured with additional support for companies investing in capital expenditure and loss-making companies also able to access tax refunds for corporation tax paid in the last three years.”

“The changes provide more immediate support but offer a hint at a step change in the attitude to corporation tax rates in future.”

Phil Luty, Partner and Head of Indirect Tax in our Birmingham office said: “Its welcome to see the extension of the Reduced Rate of 5% VAT for Hospitality and Tourism for a further 6 months to 30th September 2021 and then a reduced rate of 12.5% for another 6 months to 31st March 2022 before reversion to the standard rate. Let’s hope to see that at least partially reflected in the prices charged to the consumers who must be long-awaiting a drink in the pub and a UK holiday!”

“The ‘freeze’ on the VAT Registration threshold at £85,000 for 3 years will benefit those existing businesses on the threshold of VAT Registration although maybe registration isn’t a bad thing if the Net VAT liability is lower than the irrecoverable VAT on start-up Expenses of a new business.”

James Hunt, Employment Services Senior Manager in our Birmingham office said “A Budget designed to support employment in the immediate future with an extension of the Coronavirus Job Retention Scheme until September 2021, albeit with a lower level of funding to employers from July onwards.”

“For those employers who utilise the Scheme, the announcement of the Taxpayer Protection Taskforce will make it even more important they ensure that claims submitted are correct, as the likelihood of a review by HMRC has been increased.”

“The freezing of personal allowances and income tax bands for a 5-year period from April 2021 is a low-key way to generate additional revenue for the government over the period, but is likely to be felt more by lower earners than those at the top end.”

Download a full copy of the Budget Summary March 2021

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