BUDGET 2021 SUMMARY
PERSONAL ALLOWANCES – The personal allowance will rise to £12,750 from April 2021 and will remain at this level until April 2026.
The higher rate tax threshold will rise to £50,270 from April 2021 and will also be frozen until April 2026.
Pensions lifetime allowance will remain at the current level of £1,073,100 until April 2026.
INHERITANCE TAX – The nil rate band will remain at £325,000 and the residence nil-rate band will remain at £175,000 until April 2026.
STAMP DUTY – Stamp Duty Land Tax (SDLT) – This will remain at 0% on the first £500,000 on residential property until 30th June 2021. It will then reduce to £250,000 until 30th September 2021.
CORPORATION TAX – The rate of Corporation Tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000.
TEMPORARY TAX RELIEF ON QUALIFYING CAPITAL ASSET INVESTMENT – There will be increased reliefs for expenditure on plant and machinery. For qualifying expenditures incurred from 1 April 2021 up to and including 31 March 2023, companies can claim in the period of investment:
- a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
- a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
CAPITAL GAINS TAX – The allowance will remain at £12,300 until April 2023.
The Coronavirus Job Retention Scheme (CJRS) will be extended until the end of September 2021.
The UK government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50.
In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875. Employers will need to continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. They also need to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.
VAT – The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
EXTENDED LOSS CARRY BACK FOR BUSINESSES – To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years. This will be available for both incorporated and unincorporated businesses.