7 key points from the 2021 budget that may affect you
Chancellor Rishi Sunak today announced the UK budget, which outlines the Government’s spending plans for the year 2021.
While the budget ultimately touches everyone living in the UK in one way or another, it’s sometimes hard to work out where, and how, the spending plans will impact our lives.
Here, we’ve pulled together seven key points from the budget announcement that could affect you and your family.
Furlough to be extended until September
The Chancellor today announced, as was widely expected, that the Coronavirus Job Retention Scheme – more commonly known as the furlough scheme – will be extended until September.
The scheme is currently supporting millions of people placed on leave due to the pandemic by covering 80% of their wages up to a maximum of £2,500 per month. It was originally scheduled to wrap up at the end of April, but Sunak confirmed that it will be extended until Autumn.
There will be changes, however. Right now, employers aren’t obliged to pay anything towards the scheme. In the month of July, employers will be asked to contribute 10% of their staff’s wages, rising to 20% in August and September.
Support for self-employed will also be extended until September
While the self-employed don’t qualify for support under the furlough scheme, their equivalent – the Coronavirus Self-Employed Income Support Scheme (SEISS), will also be extended until September.
SEISS was launched around the same time as furlough, and allows the self-employed to claim up to 80% of their usual earnings based on their average three-monthly trading profit, up to a total of £7,500 per month.
Not every self-employed person qualifies for SEISS, but the Chancellor announced that an additional 600,000 people could expect to be eligible for help as access to grants is widened in the run up to September.
Universal Credit boost will continue for six months
There was a boost for low-income people claiming Universal Credit, with the Chancellor confirming the £20 top-up, first put in place in April last year, will continue for a further six months.
The £20 uplift was put in place in order to help people claiming benefits cope with the extra costs associated with the pandemic, from spending more on heating during lockdown, to bigger food bills when children are spending more time at home.
The additional £20 per week is worth more than £1,000 a year to claimants. It was due to end on the 31st of March this year, but now looks set to continue until the autumn.
Minimum wage to increase in April
One of the more significant announcements from the budget was the impending minimum wage increase which is set to kick in by April.
The minimum wage in the UK is currently £8.72 an hour for ages 25 and over. From next month, that figure will rise to £8.91 an hour. The age threshold to qualify for this will also drop from 25 years old to 23.
Stamp duty cut will continue until the end of June
There was good news for people interested in buying a new home, as the Chancellor confirmed the stamp duty holiday first launched in response to the pandemic will continue until the end of June.
Currently in place in England and Northern Ireland, the holiday ensures people don’t have to pay stamp duty on the first £500,000 of a property purchase, saving them a significant amount of money on housing costs.
Despite the stamp duty cut being slated to continue, it won’t be in exactly the same form. The nil rate band will be set at £250,000 from now until September, before returning to the £125,000 pre-pandemic level.
Government guarantee on mortgages to help first time buyers
As well as positive news with regards to stamp duty, the budget will also see support being given to first time buyers looking to get themselves on the property ladder.
The uncertainty landscape caused by the pandemic made lenders less willing to offer the kinds of mortgages that would normally entice first time buyers, causing the 95% mortgage to ‘virtually disappear’.
Through their Government guarantee, the UK Government will now offer incentives to lenders willing to take on a 95% mortgage, making it easier for first time buyers to get their foot on the property ladder without having to put up a hefty deposit.
More money to be invested in the vaccine push
This budget, like everything else in life right now, was always going to revolve around the coronavirus.
Many of the biggest stimulus packages included in the budget are in response to the economic slowdown caused by the ongoing pandemic, and the quickest way to kick start the economy is to take control of the pandemic.
With that in mind, the Government has pledged an extra £1.65 billion to the UK’s vaccination effort. While that money won’t go directly into peoples’ pockets, it is hoped it will allow us to get a handle on the virus, reopen the economy sooner, and get back to our lives.
You can read the UK Government budget for 2021 in full here.