Rishi Sunak has announced a new budget today looking to help the country in it’s recovery from the Covid pandemic.
For many people in Hull, the announcements today will have a huge impact on them over the next 6 months. The Chancellor of the Exchequer has confirmed the extension of the furlough scheme, an extension to the £20 Universal Credit uplift and scrapped the raising of fuel and beer duty.
“An important moment is upon us. ” Rishi Sunack said addressing parliament today.
“A moment of challenge and of change. Of difficulties, yes, but of possibilities too. This is a Budget that meets that moment.
“This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
“And, third, in today’s Budget we begin the work of building our future economy.”
What it means for Hull:
‘Furlough’ (Job Retention Scheme) Extended until September
Job security has been a concern for many people in Hull with much of the city’s workforce relying on the scheme to pay 80% of their income right now. Many local businesses will be able to take advantage of the extension and keep hold of their employees while things get back to normal.
The scheme will now last until the end of September with employers asked to contribute 10% in July, and 20% in August and September.
More Support for Self-Employed
It hasn’t been quite as straight-forward for Hull’s self-employed workforce who don’t get a regular income like those on furlough.
Instead, there have been three opportunities so far to claim a grant, and now a fourth one will be available next month where self-employed can claim 80% of three months’ average trading profits, up to £7,500 in total.
This will then be followed by a fifth grant later in the year, covering May to September.
However, the amount paid will depend on the amount of turnover lost. Self-employed people whose turnover has fallen by less than 30% will receive a grant that is equivalent to 30% of average trading profits.
While many self-employed people remain ineligible – the source of considerable debate – those who can show they were trading in 2019-20 from their tax returns will now be eligible for the first time. They can receive the fourth and fifth grants.
Extra £20 Universal Credit Extended
It’s been a lifeline for many people in Hull who are claiming Universal Credit.
The £20-a-week top-up that the government has been providing since last year wasn’t initially set to continue but the Chancellor has said today that this will continue for another six months, but will then be withdrawn.
Those on working tax credits will also receive a one-off payment of £500.
Help for Hull’s Hospitality Sector
Many local retail and hospitality businesses who would normally pay business rates have had the government’s tax holiday extended until the end of June.
There will also be a 66% discount after that for the rest of the year.
Alongside the tax break, the reduced rate of VAT where hospitality businesses pay just 5%, has also been extended for six months to the end of September.
There’s also been £5bn made available for additional small business grants of up to £18,000.
Under the scheme, non-essential shops will receive grants of up to £6,000 per premises, as they will be allowed to open first. Hull’s Hospitality and leisure businesses, including salons and gyms, will be able to claim grants of up to £18,000, because they will stay closed for longer and will be more affected by restrictions.
Wine, Beer and Fuel Duty Frozen
Always good news… tax on alcohol and fuel for our cars will now be frozen for another year.
Stamp duty holiday extended
People looking to buy a new home this year will benefit from the extended stamp duty holiday which was also announced in today’s budget.
Before the pandemic, anyone buying a house worth over £125,000 paid between 5% – 10% in stamp duty, depending on the value of the property. However, the government’s holiday has meant that during the pandemic, stamp duty only applies to houses above £500,000 in value and has now been extended from the end of this month, until the end of June.
This means almost all properties in Hull (99.5%) are currently exempt from paying any stamp duty at all.
How We’re Paying it all back
Large corporations will front most of the payback with the government announcing today that corporation tax (the tax that companies pay on their profits) will increase from 19% to 25% in two-years time.
Only businesses with profits of £250,000 or greater will be taxed at the full 25% rate while small businesses, those with £50,000 annual profit or lower will maintain the 19% rate.
While income tax for all of us, won’t actually rise, the tax-free allowance won’t rise either like it has done in previous years which will effect many of Hull’s workforce over the next five years. Right now, you can earn £12,500 a year without paying any tax whatsoever. This will rise slightly to £12,570 in April but will be frozen at this rate for the next five years. In effect, you’ll gradually pay more tax as you receive wage increases throughout that period.
Those who earn above £50,000 a year and currently pay the higher 40% tax rate on anything above that amount, will see a rise to £50,270 threshold in April, but will also freeze over the next five years.