This Summary covers the key tax changes announced in the Chancellor’s speech and includes tables of the main rates and allowances.
Included in our guide to the Spring Budget 2021, you will find a calendar of the tax year with important deadline dates shown.
We have outlined the significant points of interest below. However, we would recommend downloading our guide for a more detailed breakdown of the changes and what to expect.
Measures to mitigate the impact of Coronavirus
- Extension of the Coronavirus Job Support Scheme (‘furlough payments’) to September 2021 across the UK, with employer contributions to salary from July
- Fourth Self Employment Income Support Scheme grant covering February to April 2021 to claim from late April, similar to first three grants – and newly self-employed people who filed 2019/20 tax returns by 2 March may be eligible to claim for the first time
- Fifth Self Employment Income Support Scheme grant covering May to September to be claimed from late July, varying in amount according to the fall in turnover during the pandemic
- No further support announced for people working as directors through their own personal companies
- Range of ‘Restart’ grants for businesses reopening after lockdown
- Recovery Loan Scheme from 6 April 2021: government to guarantee 80% of eligible loans from £25,000 to £10 million to give lenders confidence to support UK businesses, with some other loan schemes coming to an end on 31 March 2021
- Business rates holiday for eligible retail, hospitality and leisure premises in England continues for first 3 months of 2020/21, followed by a 66% discount for the rest of the year
- 5% reduced rate of VAT for hospitality and leisure industry extended from 1 April to 30 September 2021, followed by 12.5% intermediate rate to 31 March 2022
- Nil rate of Stamp Duty Land Tax on property transactions up to £500,000 extended from 31 March to 30 June 2021, with £250,000 threshold up to 30 September 2021
- Duties on alcoholic drinks and fuel frozen for the second year running
Tax year 2021/22
- Small increases in main Personal Allowance, Basic Rate Band and National Insurance thresholds confirmed, as already announced
- Lifetime Allowance for tax-advantaged pension funds, Inheritance Tax nil rate band, Capital Gains Tax annual exempt amount, ISA subscription limits all frozen at 2020/21 levels
- No increase in CGT rates announced, contrary to some speculation in advance
- Corporation Tax rate remains 19% until 31 March 2023
- New ‘super-deduction’ for investment by companies: 130% of qualifying expenditure on general plant for two years from 1 April 2021 can be deducted from taxable profit (50% for ‘special rate’ assets, and cars are excluded)
- Trading losses (up to £2 million) for companies and self-employed businesses to be carried back up to 3 years instead of the usual 12 months, making it possible to set current losses against pre-pandemic profits to obtain a repayment
- Cap on Research and Development claims: payable tax credit not to exceed £20,000 plus three times PAYE & NIC liability
- No significant changes announced to ‘off-payroll working’ (IR35) rules, which will apply to large and medium-sized private sector employers from 6 April 2021, as previously announced
Tax measures coming into effect later
- Personal allowances and income tax rate thresholds frozen at 2021/22 levels until the end of 2025/26
- Lifetime Allowance for tax-advantaged pension funds, Inheritance Tax nil rate band and Capital Gains Tax annual exempt amount all frozen at their current levels until the end of 2025/26
- VAT registration threshold fixed at current level of £85,000 until 31 March 2024
- Corporation tax rate on profits over £250,000 to increase to 25% from 1 April 2023, with the current 19% rate applying to profits below £50,000 and a tapering calculation on profits between £50,000 and £250,000
- Establishment of ‘Freeports’ enjoying significant tax breaks announced in 8 areas of England, with further areas to be discussed with devolved administrations
We recommend that you review your personal and business plans regularly as some aspects of the Budget will not be implemented until later dates.
We will, of course, be happy to discuss with you any of the points covered in this report, and help you adapt and reassess your plans in the light of any legislative changes.