We are delighted to attach our summary of the key announcements in the Budget 2021 statement, which was announced by the Chancellor on Wednesday 3 March.
The structure of this Budget, like its predecessor, was driven by the pandemic’s impact on the economy. With some form of lockdown continuing over the next few months, Mr Sunak extended the main employment support schemes through to 30 September 2021 and added further grants and loans to assist struggling businesses.
The total cost of the pandemic measures in this tax year and next are now projected to be greater than the amount that will be raised in income tax over the same period. How the government can claw back that expenditure, while rebuilding the economy, formed the focus of the Chancellor’s speech.
Some of the important points are:
• The main rate of corporation tax will be increased to 25% from April 2023 for companies with profits over £250,000. At the same time, a new small companies’ rate of 19% will apply to companies with profits of up to £50,000, with a marginal tapered rate between £50,000 and £250,000.
• For the two years from April 2021, companies investing in qualifying new plant and machinery will benefit from a 130% first-year super-deduction.
• The personal allowance will rise to £12,570 and the higher rate threshold will be £50,270 for 2021/22 and both will then be frozen for the next four tax years.
• The capital gains tax annual exemption, inheritance tax rate nil rate bands and pensions lifetime allowance will all be frozen at their current levels until April 2026.
• The exemption from Stamp Duty Land Tax on the first £500,000 of residential property purchases will be extended to 30 June 2021 and then replaced by a £250,000 exemption until 30 September 2021.
• There will be changes to the Research and Development (R&D) tax credit system from 1 April 2021. The maximum amount payable as a tax credit for loss making businesses will be capped at £20,000 plus three times the company’s annual PAYE and NIC liability. The standard R&D offset against taxable profits will continue to operate as previously.