BUDGET 2021: KEY POINTS AT A GLANCE

The Chancellor, Rishi Sunak has revealed the Spring Budget in the House of Commons on 03^rd March 2021. We are also expecting the government to publish several important tax consultations on 23^rd March 2021 setting our its long-term taxation strategy. The summary of the key announcements from the Budget are summarised below.

INDIVIDUALS

• No changes to rates of income tax, national insurance, capital gains tax or inheritance rates
• From 06^th April 2021, personal tax allowance to increase to £12,570, basic income tax limit will increase to £37,700 and higher rates threshold will increase to £50,270. These limits will be frozen until April 2026.
• National living wage increases by 2.2% from £8.72 an hour to £8.91 and hour from April 2021.
• Pension Lifetime Allowance of £1,073,100, inheritance tax nil rate band of £325,000 and residence nil rate band of £175,000 will be frozen until April 2026.
• Stamp Duty and Land Tax (SDLT) nil rate band for purchased up to £500,000 has been extended until 30^th June 2021 which will decrease to £250,000 until 30^th September 2021 and then return of £125,000.
• The capital tax exemption will remain at its current level of £12,300 for individuals and personal representatives and £6,150 for trustees of settlements until April 2026.
• Gift holdover relief will not be available where a non-UK resident person disposes of an asset to a foreign-controlled company, controlled either by themselvers or another non-UK resident with whom they are connected. This will apply to disposals made on or after 06^th April 2021.
• New penalty regime for VAT and income tax will be introduced from 01^st April 2022 and 06^th April 2023 respectively. The new points based late submission regime will be introduced with a £200 penalty for every late submission and a revised regime for late payment of tax.

EMPLOYERS

• Furlough scheme will be extended until the end of September 2021 with employees receiving 80% of their wages for hours they cannot work. Employers have to contribute 10% in July and 20% in August and September.
• The off payroll working (IR35) rules announced in Budget 2018 and delayed last year will go ahead from 06^th April 2021 as planned.
• Two further payments will be made under the Self-Employed Income support scheme (SEISS) with the payment in May based on 80% of average profits and a further payment in July. The newly self-employed who filed a 2019.20 tax return before today can claim these fourth and 05^th SEISS grants.
• £3000 incentive is given for new apprentice hires until September 2021

VAT and INDIRECT TAXATION

• VAT registration threshold will remain at £85,000 until 31^st March 2024.
• The current reduced rate of VAT at 5% for hospitality, accommodation and attractions has been extended until 30^th September 2021. This will increase to an interim rate of 12.5% until the end of March 2022 before returning to 20% from April 2022.

BUSINESSESS

• The main rate of corporation tax rate will remain at 19% until April 2023.
• From April 2023 the main rate of corporation tax increases to 25%, with Small Profits Rate of 19% for profits not exceeding £50,000. There will be marginal relief for profits between £50,000 and £250,000 (These thresholds are proportionately reduced for the number of associated companies and short periods). Family investment companies will not qualify for the 19% rate (Big change).
• Between 01^st April 2021 and 31^st March 2023, expenditure on new plant and machinery will qualify for a 130% super-deduction. Expenditure on assets in the special rate pool such as integral features in buildings and certain cars will benefit from a 50% first year allowance. The £1 million annual investments allowance limit for expenditure on plant and machinery will be extended until 31^st December 2021.
• For the next two years the period over which businesses may carry back trading losses is temporarily extended from one to three years with a maximum carry back amount of £2 million for each year.
•  From April 2021 the amount that SME can claim on R&D tax credits will be capped at £20,000 plus three times the company’s total PAYE and NICs liability.
• From June 2021 withholding taxes will apply to the payments of annual interest and royalties to EU companies subject to the terms of the relevant double tax agreement.
• Business rates holiday for firms in England to continue until June with 75% discount after that
• £6000 per premises grant is given for non-essential outlets due to open in April and £18,000 for gyms, personal car providers and other hospitality and leisure business.
• New visa scheme to help start ups and rapidly growing tech firms source talent from overseas.
• Contactless payment limit to rise to £100 later this year.