Spring Budget 2021

Kathryn

For me, the big headlines from today’s budget are the delayed increases to corporation tax rates and the extension to the Stamp Duty Land Tax holiday, but the biggest surprise is probably that Capital Gains Tax has been left alone!

Here’s a summary of the main announcements:

Individuals

  • Personal allowance increases to £12,570 for 2021/22 and then frozen until April 2026.
  • Higher rate threshold increases to £50,270 for 2021/22 and then frozen until April 2026.
  • Capital gains tax annual allowance remains at £12,300 until April 2026.
  • No changes announced to capital gains tax rates or Entrepreneurs’ Relief.
  • No changes to savings starting rate allowance (£5,000) or personal savings allowance (£500 or £1,000 for lower and higher rate taxpayers).
  • ISA maximum contribution remains at £20,000 per year.
  • Junior ISA and Child Trust Fund contributions remain at £9,000 per year.
  • Inheritance Tax Nil Rate bands frozen until April 2026.
  • Pensions lifetime allowance will remain at £1,073,100 until April 2026.
  • Availability of Social Investment Tax Relief extended until April 2023.

Businesses and self-employed

  • Self-Employment Income Support Scheme extended to September 2021; some individuals who have not previously qualified for support will now be able to make a claim.
  • All VAT Registered businesses will be required to operate Making Tax Digital from 1 April 2022; they will have to keep records digitally and submit VAT information and Returns to HMRC digitally.
  • A ‘super-deduction’ providing 130% relief on most plant & machinery expenditure from 1 April 2021 to 31 March 2023.
  • Annual Investment Allowance limit to remain at £1,000,000 until 31 December 2021.
  • Extension to loss carry-back rules for losses made in tax years 2020/21 and 2021/22; losses can be carried back three years instead of one year.
  • A consultation is to be published to consider the R&D Tax relief schemes.

Employment

  • Furlough scheme (Coronavirus Job Support Scheme) extended to September 2021.
  • The apprenticeship hiring incentive in England is extended to September 2021.
  • Increases to the Benefit in Kind charges for vans and cars.
  • Van benefit reduced to zero from April 2021 for vans with zero carbon emissions.
  • A consultation is to be published as to whether and how to expand the Enterprise Management Incentives scheme.

Companies and shareholders

  • Corporation Tax Main Rate to be increased to 25% from 1 April 2023 for profits over £250,000.
  • Corporation Tax Small Companies Rate introduced at 19% from April 2023 for profits under £50,000.
  • Marginal rates of corporation tax will apply to profits between £50,000 and £250,000 from April 2023.
  • Extension to loss carry-back rules for losses made in accounting periods ending between 1 April 2020 and 31 March 2022; losses can be carried back three years instead of one year.
  • A consultation is to be published as to whether and how to expand the Enterprise Management Incentives scheme.
  • A consultation is to be published to consider the R&D Tax relief schemes.
  • All VAT Registered businesses will be required to operate Making Tax Digital from 1 April 2022; they will have to keep records digitally and submit VAT information and Returns to HMRC digitally.
  • A ‘super-deduction’ providing 130% relief on most plant & machinery expenditure from 1 April 2021 to 31 March 2023.
  • Annual Investment Allowance limit to remain at £1,000,000 until 31 December 2021.

VAT

  • Temporary 5% VAT rate for hospitality sector to remain in place until 30 September 2021.
  • A new reduced rate of 12.5% VAT will apply for the hospitality sector from 1 October 2021 until 31 March 2022.
  • The VAT registration threshold remains at £85,000 turnover until 31 March 2024.
  • The VAT de-registration threshold remains at £83,000 turnover until 31 March 2024.

Property

  • Extension of Stamp Duty Nil Rate band of £500,000 until 30 June 2021.
  • Stamp Duty Nil Rate band of £250,000 introduced from 1 July 2021 until 30 September 2021.
  • A 2% surcharge will apply to non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.
  • ATED charges increase by 0.5% from 1 April 2021.
  • A new government-backed mortgage guarantee scheme to enable UK homebuyers to secure a mortgage with 5% deposit.

Other announcements

  • Introduction of a new Taxpayer Protection Taskforce to crack down on Covid fraudsters.
  • Funding to tackle domestic abuse and help veterans with mental health needs.
  • Additional support for Thalidomide victims.
  • Additional money will be available to support theatres, museums and other cultural organisations.
  • Further legislation will be introduced to take action against those who promote and market tax avoidance schemes.
  • All alcohol duty rates are frozen.
  • Fuel duty remains frozen.
  • Confirmation of previous budget announcement that a Plastic Packaging tax will be introduced from April 2022 in relation to plastics containing less than 30% recycled materials.

Contact me

For more information about any of the above please contact me.

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