We are delighted to enclose our summary of the key announcements in the Budget 2021 statement, made on Wednesday 3 March.
Overall, for most the budget gave them assurances for the coming 6 months and on the basis that tax rates and allowances have been frozen beyond six months and for the coming five years we know we are all going to have to pay more tax. We do not think this is the end of the tax rises and we feel tax reliefs on pensions, capital gains tax and inheritance tax will be looked at as part of a wider review if taxation and we see more tax rises to come in November 2021, assuming those reviews have concluded.
The structure of this Budget, like its predecessor, was driven by the pandemic’s impact on the economy. With some form of lockdown continuing over the next few months, Mr Sunak extended the main employment support schemes through to 30 September and added further grants and loans to assist struggling businesses.
The total cost of his pandemic measures in this tax year and the next are now projected to be greater than the amount that will be raised in income tax over the same period. How the government can claw back that expenditure, while rebuilding the economy, formed the focus of the Chancellor’s speech.
Some of the other highlights were:
- The main rate of corporation tax will be increased to 25% from April 2023 for companies with profits of at least £250,000. At the same time, a new small companies’ rate of 19% will apply to companies with profits of up to £50,000.
- For the two years from April 2021, companies investing in qualifying new plant and machinery will benefit from a 130% first-year super-deduction.
- The personal allowance will rise to £12,570 and the higher rate threshold will be £50,270 for 2021/22 and both will then be frozen for the next four tax years.
- The capital gains tax annual exemption, inheritance tax rate nil rate bands and pensions lifetime allowance will all be frozen at their current levels until April 2026.
- The exemption from stamp duty land tax on the first £500,000 of residential property value will be extended to 30 June 2021 and then replaced by a £250,000 value exemption until 30 September 2021.
If you have any questions about the summary’s contents or how any aspects of your tax and financial planning may be affected by the Budget, please call us to discuss them.
