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Rishi Sunak is relying on so-called fiscal drag to help bring in revenues over the next few years.
Freezing the thresholds on personal tax allowances, inheritance tax and the amount you can put into your pension pot tax-free are less politically painful than a full-blown tax rise.
Two measures Sunak says will start tackling debt –
– Freeze personal tax thresholds after next year until 2026. No rise in income tax, NI or VAT, inheritance tax threshold.
– In 2023, corporation tax up to 25% – “fair and necessary to ask them to contribute.”
Right – Chancellor has gone full on fiscal drag machine. Freezing thresholds left, right and centre (e.g inheritance tax and VAT). We agree – set out plans for this https://t.co/qsgCmlTjXa
He’s properly gone big on the Corporation Tax rise – up to 25% in 2023. Surprised he’s gone that far. That’s what planning for a 2024 election does for you (ie reduce tax rise pressure nearer the election/make Tory MPs vote it through now).
New OBR GDP forecast suggests the economy will grow by 3.9% in real terms between 2019 and 2024, compared to 3.7% in the November 2020 forecast. Before the crisis this was expected to be 7.1%. #Budget2021 pic.twitter.com/9kSsCTI6WW
UK growth forecasts from @OBR_UK show return to low, approx. 0.4% a quarter, trend growth after 2022 rebound: 1.7%, 1.6% and 1.7% in 2023, 2024 and 2025. Sugar rush recovery then back to the crawl – secular stagnation debate to rumble on.
All the Treasury budget documents are here.
And here is the key one – the budget red book (pdf).