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Budget 2021 Headlines

The Government Financial Budget was announced yesterday and this email is to provide you with the headlines that may affect your financial planning going forward.

You will see there are few changes short-term, with most allowances frozen at current rates.

The freezing of income tax thresholds (after the small increase applied now) will gradually result in more tax over the next few years as earnings increase but allowances and tax thresholds stay the same.

The major change announced is regarding corporation tax rises to 25%, however this will take effect from 2023 and tapering between 19% corporation tax (below £50,000 profits) and 25% corporation tax (over £250,000 profits) will be announced later.

If you would like a free consultation on your financial planning, including analysis of your current financial products, please contact us to arrange a call with one of our advisers.

Personal Taxation 2021/22

Income Tax

  • Personal Allowance increasing to £12,570
  • Basic Rate Band to £37,700
  • Higher Rate threshold therefore starts at £50,270.

These figures will be frozen until April 2026.

No changes to rates of income tax, national insurance or VAT.

No changes to dividend allowance, personal savings allowance, starting rate band for savings.

Capital Gains Tax

  • Annual exemption unchanged at £12,300

This figure will be frozen until April 2026.

No change to CGT tax rates.

Inheritance Tax

  • Nil rate band frozen at £325,000 pp
  • Residence nil rate band unchanged at £175,000 pp
  • The residence nil rate band taper threshold remains at £2 million

These figures will be frozen until April 2026.

 

Pensions

  • Lifetime allowance for pensions frozen at £1,073,100 until April 2026.

No changes to annual allowance, carry-forward, money purchase annual allowance or tapered annual allowance figures or rules.

ISAs

  • ISA subscription limit remains at £20,000.
  • Junior ISA and Child Trust Fund subscription limits remain at £9,000.

Company Taxation 2021/22

Corporation Tax

No immediate changes. Changes announced do not take place until 2023

  • Main corporation tax rate to increase to 25% in 2023 for companies for profits of over £250,000
  • 19% rate will remain for companies with profits of less than £50,000
  • Tapering rate to apply to companies with profits of over £50,000 but less than £250,000, specifics to be announced at a later date

Property 2021/22

Stamp Duty Land Tax (SDLT)

  • Temporary cut in England and Northern Ireland extended until September 2021.
  • 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 returning to its standard level of £125,000 on 1 October 2021.

Mortgages

  • New mortgage guarantee scheme to enable all UK homebuyers to secure a 95% mortgage on properties up to £600,000 – only a 5% deposit needed.

Other Areas of Interest 2021/22

Extra Covid-19 measures announced.

Coronavirus Job Support Scheme (Furlough)

  • Extended to September 2021 across the UK with Government to continue paying 80% of employees’ wages for hours they cannot work
  • Employer contribution of 10% required in July and 20% in August and September.

Self Employment Income Support Scheme (SEISS)

  • Extended to September 2021 across UK, with those who filed a tax return in 2019/20 now being able to claim for the first time.

Hospitality Firms

  • Lower VAT rate to be maintained at 5% rate until September 2021
  • Fuel duty and alcohol duties are frozen.

Please click here for further details on the Budget announcements

With valuable allowances remaining for pensions, ISAs and other tax-efficient investments before the end of the tax-year, we would suggest that these are looked at where affordable.

If you would like further information or advice then please contact us via email to request a call.