SPRING BUDGET – March 2021
Following the Spring Budget 2021, please see below a summary of the main financial points:
- The Personal Allowance for 2021/22 is increasing to £12,570 and the basic rate band to £37,700 meaning a higher rate threshold of £50,270.
- These figures will then be frozen until April 2026.
- There are no changes to the dividend allowance, personal savings allowance or starting rate band for savings.
- The National Insurance contributions Upper Earnings Limit and Upper Profits Limit will remain aligned to the higher rate threshold of £50,270 for 2021/22 to 2025/26.
- The Lifetime allowance for pensions is frozen at £1,073,100 until April 2026.
- There are no changes to the annual allowance, money purchase annual allowance or tapered annual allowance figures or rules.
Capital gains tax
- The capital gains tax annual exempt amount is frozen at £12,300 until April 2026.
- There were no changes made to the CGT rates.
- The inheritance tax nil rate band is frozen at £325,000 and residence nil rate band at £175,000 until April 2026.
- The residence nil rate band taper threshold remains at £2 million until April 2026.
- The ISA subscription limit remains at £20,000 in 2021/22.
- The Junior ISA and Child Trust Fund subscription limits remain at £9,000 in 2021/22.
- Will remain at 19% for tax years 2021/22 and 2022/23.
- It will the increase to 25% in 2023/24.
- However, 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 so only companies with profits above £250,000 will suffer the full 25% rate.
- Companies with profits between £50,000 and £250,000 will be taxed at the main rate of 25% but will be able to claim marginal relief.
Temporary extension of carry back of trading losses:
- The government will temporarily extend the period over which incorporated and unincorporated businesses may carry-back trading losses from one year to three years.
- This extension will apply to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020/21 and 2021/22 by unincorporated businesses.
Stamp duty land tax (SDLT)
- The temporary cut in England and Northern Ireland is extended until September.
- The £500,000 nil rate band will be extended until 30 June 2021 then it will be set at £250,000 until 30 September 2021 before returning to its standard level of £125,000 on 1 October 2021.
- Non-UK resident SDLT: A Stamp Duty Land Tax surcharge is introduced on non-UK residents purchasing residential property in England and Northern Ireland with effect from 1 April 2021. The surcharge will be 2% above the existing residential rates.
Coronavirus support schemes
Coronavirus Job Support Scheme – Furlough
- This scheme will be extended to September 2021 across the UK.
- Employer contribution will though be required of 10% required in July and 20% in August and September.
Self Employment Income Support Scheme (SEISS)
- Extended to September 2021 across the UK.
- People with those who filed a tax return in 2019/20 are now able to claim for the first time.
Taxation of coronavirus support payments
- Grants from the Self-Employment Income Support Scheme (SEISS) made on or after 6 April 2021 are to be taxed in the year of receipt.
- This measure will have effect for the tax year 2020 to 2021 and subsequent tax years.
- If a person was not entitled to SEISS payment then they will be subject to a 100% tax charge if they receive payment to which they are not entitled. This measure will allow HMRC to recover payments where an individual was entitled to the grant at the time of claim but subsequently ceases to be entitled to all or part of the grant.
New mortgage guarantee scheme
- Enable all UK homebuyers to secure a 95% mortgage on properties up to £600,000 – only a 5% deposit needed.
- The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022.
- Therefore, the taxable turnover threshold which determines whether a person must be registered for VAT will remain at £85,000 and the taxable turnover threshold which determines whether a person may apply for deregistration will remain at £83,000.
- The further 2 year period ends on 31 March 2024.
- VAT relief – still halved at 12.5% to help retail and tourism industry in particular.
- Will not revert to standard 20% until next year.
- This should reduce VAT receipts this year by almost £5bn.
If you wish to discuss any of the above with relation to your own finances and financial plan, please feel to call us on 01626 833225 or email us to find out more.
For clarification of any points discussed above and any future independent advice regarding your own financial planning, please do contact us on 01626 833225 or email [email protected]
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