Today the Chancellor of the Exchequer, Rishi Sunak, announced his Budget for 2021. The Budget comes as official figures show the UK economy contracted by 9.9% last year and unemployment rose to 5.1% in the quarter to December 2020. There were a number of areas which will have a direct impact on Credit Unions including:

  • Corporation tax is due to increase to 25% in April 2023, however, this will only impact some businesses. Businesses with profits of less than £50,000 will continue with the 19% tax rate. Businesses with profits between £50,000 and £250,000 will face a tapered rate and only those above £250,000 will face the full 25% tax rate.
  • Mortgage guarantee scheme to help people with a 5% deposit was announced.
  • Furlough to be extended until end of September with the government paying 80% of salary. Employers will be asked to contribute 10% in July and 20% in August and September.
  • Minimum wage to increase to £8.91 per hour in April.
  • The current bounce-back loans and other coronavirus loans for businesses will be replaced by the Recovery Loan Scheme. The new scheme will be  80% guaranteed by the government
We will be sending out our Budget update to clients shortly which will provide more information on the changes announced by the Chancellor.