Rishi Sunak delivered his latest budget on 3 March 2021.
 

Coming at a time of continued social and economic uncertainty, he set out the government’s tax and spending plans for the year ahead, whilst also outlining measures to move towards rebalancing the public finances and achieving long-term economic security.

Given this uncertainty, the government has avoided introducing measures to remove allowances and directly increase taxation for the most part – although there are some significant exceptions. 

The largest increase in taxation will be felt by companies.

 

Key measures announced for businesses:

  • The main rate of Corporation Tax will remain at 19% for the financial years beginning 1 April 2021 and 1 April
    2022. From 1 April 2023, the main rate will increase to 25% on profits over £250,000.
  • A small profits rate will also be introduced for businesses with profits of £50,000 or less.
  • From 1 April 2021 until 31 March 2023, companies investing in new qualifying plant and machinery will
    benefit from a 130% first-year capital allowance.
  • The amount of the SME payable R&D tax credit that a company can receive in any one year will be capped at
    £20,000, plus three times the company’s total PAYE and NICs liability.
  • The current temporary £1m Annual Investment Allowance (AIA) limit in respect of capital allowances
    remains in place for one year from 1 January 2021. The AIA will reduce to £200,000 on or after 1 January
    2022.

Key measures announced for individuals:

 

  • The tax-free personal allowance will rise to £12,570 for the 2021/22 tax year.
  • After an increase in April 2021, the Income Tax Personal Allowance and tax thresholds will be frozen until April 2026.
  • The national living wage will increase from £8.72 to £8.91 per hour for 2021/22.
  • ISA limits will remain unchanged. 
  • A freeze on the Pension Lifetime Allowance, Inheritance Tax nil rate band and Capital Gains Tax annual exempt amount will be introduced and upheld until 2026.
  • Marginal rises in National Insurance Contributions will come into effect.

Download our Spring Budget summary report.

  

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    Please note:

    The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. The information in this report is based upon our understanding of the Chancellor’s Spring Budget 2021, in respect of which specific implementation details may change when the final legislation and supporting documentation are published. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. ISA and pensions eligibility depend on personal circumstances. The value of investments can fall as well as rise and you may not get back the full amount you originally invested. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. All tax tables include numbers, rates and allowances only. None of the usual qualifying notes are included in this report.

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