UK Budget 2021: Summary from an international investor perspective
The UK’s Chancellor, Rishi Sunak, laid out his budget for the FY2021-22 on Wednesday 3rd March before the House of Commons.
Here in the UK, the Budget was waited on with apprehension, with the economy one of the worst hit of all major economies. The UK’s GDP was down by 9.9% in 2020 compared with 2019. Though the economy is expected to bounce back, with growth of around 7% expected in 2022, there is no doubt that Government support will be needed.
Setting out the government’s spending plans for the year ahead, Mr Sunak announced new measures to help business and jobs through the pandemic and to support the UK’s long-term economic recovery. He also outlined a series of plans to raise taxes to help rebalance the public finances beyond the COVID recovery.
In the short term, the furlough scheme, in which the Government supports employers to retain jobs and thereby income for employees, has been extended until the end of September, at which point the UK hopes to be out of all lockdown restrictions.
Here are some of the key announcements for international investors:
Companies with profits greater than £250,000 will see a rise in the CTR from 19% to 25% from April 2023, though the rate will remain the lowest rate in the G7. The rate will stay at 19% for companies with profits of less than £50,000.
However, there were a number of tax breaks announced that aim to incentivise investment and economic activity. These include that firms will be able to deduct qualifying investment costs from their tax bill, reducing taxable profits by 130%, dubbed the “super deduction”. There were also incentives for firms to take on apprentices and trainees.
And there is a new unsponsored points-based visa to attract the best international talent in science, research and tech, allowing for a more streamlined experience for people in academia, science and technology to work in the UK. Additionally, the Chancellor said there will be “improved visa processes for scale-ups and entrepreneurs”.
Mr Sunak also announced a string of green measures, that include a new UK Infrastructure Bank focussed on green investments to be set up in Leeds. The bank will have £12bn in capital, and aims to fund £40bn worth of public and private projects. And a £15bn green bond, including for retail investors, to help finance the transition to net zero by 2050.
Finally, eight freeports will be set up across the country, with Mr Sunak arguing that they would help to increase manufacturing, and encourage jobs and investment in those areas. Goods that arrive into freeports from abroad are not subject to national tariffs. These taxes are only paid if the goods leave the freeport and are moved elsewhere in the UK.
We look forward to reviewing further details as they come from the Treasury and across the Departments of HMG in the coming weeks and months.