Yesterday, 3 March 2021 the Chancellor, Rishi Sunak, delivered his second Budget.
Given the dire straits of the country’s finances due to the effects of the fight against Covid-19 many were expecting tough measures.
Therefore, the Chancellor realized that what the country needs at the moment is a boost to the economy rather than fiscal tightening.
With this in mind he decided not to abolish the Business Asset Disposal relief (previously entrepreneurs’ relief) and not to introduce a wealth tax.
Also, no immediate hike in tax rates means that the most feared alignment of capital gain tax to income tax has not materialized.
Please download here our 2021 Budget analysis. Herewith below we highlighted the major tax measures.
- The Capital Gain Tax annual exemption will be maintained at the current level of £12,300 for individuals and personal representatives until April 2026.
- The Income Tax personal allowance will increase to £12,570 in the financial year 2021-22 but it will be frozen for a period of four tax years starting with the financial year 2022-23.
- The band of savings income that is subject to the 0% starting rate will remain at £5,000 for the financial year 2021-22.
- The increase of the he temporary residential nil-rate band to £500,000 that was supposed to end in March will be extended until the end of June 2021.
- The introduction of a 2% Stamp Duty Land Tax surcharge on the purchase of UK residential property by non-UK resident buyers from 1 April 2021. This had already been announced.
- Corporation tax to rise to 25% for larger companies from financial year 2023.
From 1 April 2023 the rate of corporation tax will increase to 25% for companies with profits of more than £50,000. The current rate of 19% will apply to companies with profits up to £50,000 with a tapered rate applying to profits between £50,000 and £250,000. The 19% rate will not apply to close investment-holding companies.
- Carry-back of trading losses temporarily extended.
Trading losses incurred in the current and next financial years will be allowed to be carried back and offset against profits of the last three years.
Losses will be carried back against later years first and can generate repayments of tax.
Investments in qualifying new plant and machinery between 1 April 2021 and 31 March 2023 will be relieved by a super-deduction of 130%.
Furthermore we will like to report that both the furlough and self-employed income support schemes have been extended until September 2021.
If you would like to discuss any of the above topics or have any query please contact a member of our team.