The Chancellor, Rishi Sunak, delivered his second budget on the 3rd of March 2021. There were two main themes, further help in the current situation and initial steps to recover the astronomical costs of this pandemic.
The furlough scheme and self-employed grants have been extended until the end of September 2021.
As widely predicted, the Stamp Duty holiday has been extended to the end of June 2021 and the nil-rate band from June 2021 will be increased to £250,000 up to September 2021.
Mortgage guarantee scheme
This will be introduced in April 2021. The scheme is available for new mortgages up to 31 December 2022 and provides a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000.
The bad news!
Corporation tax is set to rise to 25% from April 2023. However, small companies with profits below £50,000 will continue to pay at the current rate of 19%. There will also be a reintroduction of tapering relief for businesses with profits under £250,000 so that they pay less than the main rate.
The Government said it was to announce a series of tax consultations on 23 March which may begin to reveal changes to try and balance the books after the unprecedented spending required to deal with the COVID-19 pandemic.
However, in this spring budget the Chancellor confirmed the following:
The Income Tax rates remain unchanged. The Personal Allowance will rise in with CPI as planned to £12,570 from April 2021 and will be then frozen until April 2026.
The basic rate band will increase from April 2021 by £200 to £37,700. This means that an individual with their full personal allowance available will begin to pay higher rate tax on income above £50,270 (£37,700 + £12,570). The higher rate threshold will be uprated in with CPI in April 2021 but then will be frozen until April 2026.
Capital Gains Tax
The annual exempt amount on Capital Gains remains unchanged at £12,300 for individuals. This will remain frozen until April 2026.
The Inheritance Tax bands will be frozen until April 2026. The nil-rate band will continue at £325.000; the residence nil-rate band will continue at £175,000 and the residence nil-rate band taper will continue to start at £2 million.
The ISA allowances will be frozen at £20,000 (£9,000 for the Junior ISA) for the 2021/2022 tax year.
The Pension Lifetime Allowance for 2020/21 will not be increased between 2021/22 and 2025/26 (inclusive). Instead, it will remain at £1,073,100 throughout this period.
It will be interesting to learn what the further tax consultations bring, some may well have been announced by the time you read this.
If you wish to discuss this budget and your financial plans, please contact us, as ever the initial discussion is free and without any obligation.
Robert Nicholas Financial Advisers.