News

The Spring Budget 2021

08
Mar

Download a Free Copy of the Spring Budget Newsletter

We have put together our own Spring 2021 Budget Newsletter. You can download the pdf document for free to help gain an insight into how the budget will affect you.

 The proposals of most interest were:

  • The addition of £70 to the personal allowance and £200 increase in the basic rate band, in line with indexation requirements. However, after 2021/22, the personal allowance and higher rate threshold (outside Scotland) will be frozen for four tax years. 
  • The inheritance tax nil rate band, the pensions lifetime allowance and the capital gains tax annual exemption will all be frozen at their current levels for the next five tax years.
  • For companies with profits of over £250,000, in April 2023 the rate of corporation tax will jump by 6% to 25%. A new smaller companies’ rate of 19% for companies with profits of up to £50,000 will be introduced at the same time.
  • A new ‘super-deduction’ 130% first year allowance will be introduced for companies investing in plant and machinery between 1 April 2021 and 31 March 2023.
  • The temporary £500,000 0% band for stamp duty land tax will continue to apply for residential property purchases up to 30 June 2021. The band will then be halved for the following three months before reverting to its original £125,000 level from 1 October.
  • The coronavirus job retention scheme (CJRS – furlough scheme) and the self-employed income support scheme will be extended to September, albeit with reductions in the final three months of their life.
  • The business rates holiday for retail, hospitality and leisure businesses will also be extended. Until June 2021 100% relief will apply and thereafter reduced (and capped) 66% relief will operate until the end of March 2022. In this Newsletter we look at the impact of the main changes on various groups of taxpayers. The categorisation is inevitably rather arbitrary, so it pays to read all sections. Similarly, several of the tax planning points – such as those listed below in our 12 Quick Tax Tips – are universal. 

12 Quick Tax Tips

  1. Don’t waste your (or your partner’s) £12,570 personal allowance in 2021/22.

  2. Don’t forget the personal savings allowance, reducing tax on interest earned.

  3. Don’t ignore the dividend allowance, eliminating tax on £2,000 of dividends. 

  4. Don’t dismiss National Insurance contributions – they are really a tax at up to 25.8%. 

  5. Think marginal tax rates – the system now creates 60% (and higher) marginal rates. 

  6. ISAs should normally be your first port of call for investments and then deposits. 

  7. Even if you’re eligible for a LISA, you still might find a pension is a better choice. 

  8. Tax on capital gains is usually lower and paid later than tax on investment income. 

  9. Trusts can save inheritance tax, but suffer the highest rates of CGT and income tax. 

  10. File your tax return on time to avoid penalties and the taxman’s attention. 

  11. If you are entitled to a company car, going hybrid or electric could slash your tax bill.

  12. Don’t assume HMRC won’t know: automatic information exchange is now widespread.