What Does the 2021 Budget Mean for Me As An Individual?

The annual Budget made to the House of Commons by the government's chief minister of finance is something that many people pay attention to. Nevertheless, a year on from the beginning of restrictions being made due to COVID-19 and the insurmountable financial strain faced by the UK government, this year's 2021 budget feels particularly significant.

There is particular pressure this year faced by Rishi Sunak with regard to the government calculating the financial implications involved with two key areas:

  • How will the government pay off the debts which have mounted up during the last 12 months of the pandemic?
  • How is the government planning to support people who have struggled financially during this time?

Taking all of this into account, you may be asking, how does all of this affect me? With that in mind, in this blog, we run through the main points outlining the implications of the 2021 Budget for you as an individual.

What support is there for workers in 2021?

Chancellor Rishi Sunak has announced that there will be extensions for several measures put in place in the last 12 months in order to support workers throughout the pandemic. Alongside providing financial support for those who need it, several initiatives have been outlined in the Budget to support workers. Here we explore what this could mean for your finances depending on your circumstances.

The Extension of the Furlough Scheme

Furlough, also referred to as The Job Retention Scheme has been pivotal to many people over the last year. The furlough scheme was originally put in place at the beginning of the pandemic with the aim of ensuring as many people as possible stayed employed throughout that time. Initially, the scheme was due to end in October 2020. Despite this, 4.7 million are currently still on furlough. Taking this into account, the furlough scheme is now being extended to September 2021.

This indicates that the government is going to have to pay 80% of anyone on furloughs salary with the total limited to £2,500. Despite this Employers will have to pay 10% towards the hours employees spend not working during July and then 20% in August and September. No doubt many workers and employers will be elated with this news and perhaps, somewhat relieved. 

Rishi Sunak also stated that more than 600,000 people, as well as those who began working as self-employed in 2019-20, are going to be eligible for government support too.

Continuation of Flexible Furlough

From July 1st 2020, employers could bring furloughed employees back into work on a flexible basis, for example, part-time. They could do this and still claim a grant from the government who would pay for the remainder of hours not spent working. If an employer wishes to implement flexible furlough, they must have a written agreement with their employee of this arrangement. Employers will also need to pay for National Insurance and pensions too.

Self-employment Grant to Continue

The key piece of information self-employed workers will want to know is that two more grants are going ahead in order to help cover any loss of earnings. The fourth grant is going to cover the period of February-April 2021 while the final fifth grant is going to be available from May and will be available for claims up until July.

The Self-Employment Income Support Scheme (SEISS) has supported over two million people so it's likely that the six month extension period is very welcome news. The scheme is going to continue to work in the same way as it previously has done with individuals being able to claim up to 80% of their monthly trading profits over the course of a three month period (limited at £7,500).

This is a positive thing for many as lots of people who became self-employed in the pandemic are going to be eligible for financial support. Rishi Sunak has stated that thousands more people are going to be eligible for the grants this time after facing much reproval that newly self-employed workers were previously not going to benefit from the scheme.

Whatever your thoughts on the 2021 Budget, having your personal finances in check is important now more than ever. Using a chartered accountant to assist you with personal accountancy and taxation services to evaluate, organise and carry out a sustainable plan for your finances, is key. That is why at Keith Graham, we provide an extensive range of accountancy and advisory services available to both our business and individual clients, combined with a friendly and personal approach is what sets us apart from other accountants in Surrey and Hampshire. To find out more, contact us today. You can also fill out our quick and simple online form if you'd prefer. We'd be happy to help, whatever your query.