Budget Highlights Spring 2021

On Wednesday last week the Chancellor, Rishi Sunak, delivered the Government’s Budget for 2021.

In his speech, the Chancellor accounced extensions to a number of curernt Covid-19 schemes, alongside additional support for individuals and businesses.

Some of the key highlights are noted below

Covid-19 support

  • The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021 with the Government continuing to pay 80% of employees’ usual wages for the hours not worked, up to the end of June 2021.  For July CJRS grants will cover 70% of wages which reduces again to 60% in August and September with the employer making the additional contribution to bring the wages up to 80%.
  • The Self-Employment Income Support Scheme (SEISS) will also be extended to include two further and final grants.

Business taxes

  • The main rate of corporation tax will increase to 25% in April 2023.
  • A new small profits corporation tax rate of 19% will be introduced in April 2023.
  • A 130% ‘super deduction’ will be introduced for capital investments in qualifying new plant and machinery.
  • Trading losses can temporarily be carried back for three years.

Capital taxes

  • The current capital gains tax annnual exempt amounts of £12,300 for individuals and £6,150 for most trustees are to remain the same up to and including the 2025/2026 tax year.
  • The inheritance tax nil-rate band and residence nil-rate band have also been frozen at their current levels of £325,000 and £175,000 respectively, until 05 April 2026.

Income tax

  • Personal allowance to be frozen at £12,570 from 2021/2022 to 2025/2026.
  • Basic and higher rate income tax thresholds to be frozen at £37,700 and £50,270 respectively, from 2021/2022 to 2025/2026.
  • Pensions lifetime allowance frozen at current level of £1,073,100 from 2021/2022 to 2025/2026.

VAT and indirect taxes

  • The stamp duty land tax holiday on property up to £500,000 will be extended by three months to 30 June 2021.
  • The temporary 5% reduced rate of VAT for hospitality and tourism businesses will be extended by six months, followed by a 12.5% rate for six months.
  • The VAT registration threshold will remain fixed at £85,000 until 31 March 2024.

If you would like some further information about how these changes will affect you or your business please get in touch.  The first meeting is always free.


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