The Spring Budget - at a glance
This week the Chancellor, Rishi Sunak, delivered his Spring budget with a targeted balance of tax increases, tax freezes and tax reliefs in an effort to both support individuals and businesses still struggling during the ongoing pandemic and to stabilise the national debt.
So, what did Mr Sunak actually have to say and how does it impact you. We’ve summarised the various announcements below but if you’d like full details, the government’s press release from the budget is also available.
Key budget changes
1) Income taxes:
- Personal allowance to be frozen at £12,570 until 2025/26.
- Basic and higher rate Income Tax thresholds to be frozen at £37,700 and £50,270, respectively until 2025/26.
- Pensions lifetime allowance frozen at current level of £1,073,100 until 2025/26.
2) Corporation tax:
- For businesses with profits greater than £250,000 the main rate of Corporation Tax will increase to 25% in 2023.
- For businesses with profits of £50,000 or less, the Corporation Tax rate will remain at the current 19%.
- For businesses with profits greater than £50,000 but less than £250,000, a tapered rate will be introduced. We are still waiting for further details on this point.
3) The VAT registration threshold will remain fixed at £85,000 until 31 March 2024.
4) The R&D tax credit that a small or medium sized business can receive in 1 year is now capped at £20,000 plus 3 times the company’s total PAYE and NIC’s liability.
5) Capital Gains Tax – the current annual exempt amount (£12,300) has been frozen up to and including the 2025/26 tax year.
6) The Stamp Duty Land Tax holiday on property up to £500,000 will be extended to 30 June 2021 in England and Wales. In England only, it will then be tapered off until 30 September.
7) Inheritance tax thresholds will stay the same until April 2026; the nil rate band remains £325,000.
Support for businesses: the key points
- From April 2021, a new 'super deduction' will be introduced allowing companies to cut their tax bills by up to 25p for every £1 they invest in qualifying new plant and machinery. This scheme will be in place for 2 years. We are waiting for further details but it might be worth considering whether you should delay any new equipment purchases until April 202; depending on your year end, tax relief would be increased but you might have to wait longer to receive it.
- Trading losses can temporarily be carried back for three years to support cash flow.
- A new UK-wide Recovery Loan Scheme offering loans between £25k and £10 million, plus invoice finance between £1,000 and £10 million will be available for all businesses to help with recovery.
- £5 billion for new Restart Grants - a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
- Extension of the Film & TV Production Restart scheme, with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
- VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September 2021, followed by a 12.5% rate for a further 6 months until 31 March 2022.
- Eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.
- The furlough scheme continues to September 2021 across the UK. From 1 July 2021 the government will reduce the amount of an employee's wage from 80%. Full details of the furlough payments available to businesses are available here.
- Small and medium-sized employers in the UK will continue to be able to reclaim up to 2 weeks of eligible Statutory Sick Pay per employee from the Government.
We hope this summary is useful to you. Feel free to get in touch if we can assist you at all.
All the best and stay safe.
Duncan & Jo