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Budget 2021

19/03/2021 by Webmaster

Chancellor Rishi Sunak promised to do “whatever it takes” and confirmed that the furlough scheme would be extended until September 2021 to support jobs through the pandemic.

The Self-Employment Income Support Scheme (SEISS) has been extended, as expected, with two further grants this year. The newly self-employed from 6 April 2019 can now claim, provided they filed their 2020 tax return by 2 March 2021.

Restart grants will be available. Non-essential retail businesses will be eligible for up to £6,000.  The leisure and hospitality sectors, which have been worse affected and will re-open later, will be eligible for up to £18,000.

The other highlights are:

INCOME TAX

  • Personal allowance frozen at £12,570 for 4 years
  • Basic and higher rate income tax thresholds frozen at £37,700 and £50,270 for 4 years.
  • Pensions lifetime allowance frozen at £1,073,100 for 4 years.

BUSINESS TAX

  • Small profits corporation tax rate of 19% to be introduced in April 2023
  • The main rate of corporation tax will increase to 25% in April 2023
  • A 130% 'super deduction' will be introduced for capital investments in qualifying new plant and machinery
  • Trading losses can temporarily be carried back for three years.

CAPITAL TAXES

  • CGT annual exempt amount of £12,300 for individuals frozen for 4 years.
  • IHT nil-rate band and residence nil-rate band frozen at £325,000 and £175,000 respectively, until 5 April 2026.

PAYROLL TAXES

  • Reliefs for home office expenses, COVID tests and cycle exemptions
  • Time limits Enterprise Management Incentive schemes amended to ensure furloughed workers not excluded
  • IR35 off-payroll working rules confirmed from 6 April 2021 but no penalties for inaccuracies in the first 12 months of the regime, unless there is evidence of deliberate non-compliance.

VAT AND INDIRECT TAX

  • Temporary 5% VAT rate for hospitality and tourism businesses will be extended by six months, followed by a 12.5% rate for six months.
  • VAT registration threshold frozen at £85,000 until 31 March 2024.
  • The Scottish government has confirmed it is not going to match the stamp duty land tax holiday in England and Wales.

There are therefore no knee-jerk tax increases for smaller businesses but the freeze in rates and allowances is effectively a stealth increase in the amounts that everyone will pay.

“In order to reveal to all eyes what he was made of, I wanted to break open the handsome wax-figure I presented everywhere.”

― Albert Camus, The Fall

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