Posted 11th March 2021
Chancellor Rishi Sunak set out a Budget to protect businesses through the pandemic, fix the public finances and begin to build an economy for the future. Here is a brief summary of the main points:
The Chancellor once again pledged to do ‘whatever it takes’ during the Covid-19 pandemic beginning by confirming that both the furlough scheme and the Self Employment Income Support Scheme (SEISS) will be extended until September 2021. With regards to the SEISS, those individuals who filed a tax return in 2019/20 will now be able to claim for the first time.
Income tax: For 2021/22 the Personal Allowance will increase to £12,570, basic rate tax band to £37,700 and the higher rate tax threshold will increase to £50,270 – these figures will be frozen until August 2026. There is to be no change to the dividend allowance, personal savings allowance or starting rate band for savings.
Capital Gains Tax (CGT): the annual exempt amount has been frozen at £12,300 until April 2036, with no change to the tax rates.
The Stamp Duty Land Tax (SDLT) temporary cut in England and Northern Ireland has been extended until September 2021. The £500,000 nil rate band will continue until 30 June, it will taper to £250,000, until the end of September and then return to the standard level of £125,000 from 1 October 2021.
Pensions: The Lifetime allowance for pensions has been frozen at £1,073,100 until April 2026. There have been not changes to the annual allowance, money purchase annual allowance of the tapered annual allowance.
Regarding Corporation Tax, the main tax will increase to 25% in April 2023 but for companies with profits of no more than £50,000 the rate will remain at 19%. There will be a tapering of the rate for companies with profits over £50,000 but less than £250,000, therefore only those with profits above £250,000 will suffer the full 25% rate.
Turning to duties, tax on beer, wine, cider and spirits has been frozen while fuel duty also remains frozen for an 11th consecutive year.
The ISA subscription limit remains at £20,000 in 2021/22 and the Junior ISA and Child Trust Fund subscription limits remain at £9,000.
Hospitality and leisure businesses will also pay no business rates for the next three months, then rates will be discounted for the remaining nine months of the year.
The Inheritance nil rate band will be frozen at £325,000 and residence nil rate band at £175,000 until April 2026 (and the residence nil rate taper threshold remains at £2 millions until April 2026).
If you have any questions or would like further explanation of any points mentioned above please contact us.