The focus of this year's Budget is on allowing the economy to bounce back, encouraging consumer spending, assisting new businesses, green investment and exporting.
The structure of this Budget, like its predecessor, was driven by the pandemic’s impact on the economy. With some form of lockdown continuing over the next few months, Mr Sunak extended the main employment support schemes through to 30 September and added further grants and loans to assist struggling businesses.
The total cost of his pandemic measures in this tax year and the next are now projected to be greater than the amount that will be raised in income tax over the same period. How the government can claw back that expenditure, while rebuilding the economy, formed the focus of the Chancellor’s speech.
Click here to view our Tax Tables for the 2020/21 and 2021/22 tax years, updated for announcements made in the Budget on 3 March 2021.
We have also summarised some of the main Budget updates below:
- Furlough scheme and support grants for self-employed have been extended to end of September
- The main rate of corporation tax will be increased to 25% from April 2023 for companies with profits of at least £250,000. At the same time, a new small companies’ rate of 19% will apply to companies with profits of up to £50,000.
- For the two years from April 2021, companies investing in qualifying new plant and machinery will benefit from a 130% first-year super-deduction.
- The personal allowance will rise to £12,570 and the higher rate threshold will be £50,270 for 2021/22 and both will then be frozen for the next four tax years.
- In Scotland, the higher rate threshold for non-savings, non-dividend income will rise to £43,662 in 2021/22 as announced in the Scottish Budget.
- The NICs upper earnings limit and upper profits limit will remain aligned to the higher rate threshold at £50,270 for 2021/22.
- The capital gains tax annual exemption, inheritance tax rate nil rate bands and pensions lifetime allowance will all be frozen at their current levels until April 2026.
- The exemption from stamp duty land tax on the first £500,000 of residential property value will be extended to 30 June 2021 and then replaced by a £250,000 value exemption until 30 September 2021.
- A new HMRC task force was announced to investigate COVID scheme fraud will be introduced as well as continued efforts to combat tax avoidance and evasion.
- Introduced a selection of bold measures aimed at “levelling up” and supporting business start-ups, particularly sustainable green businesses, innovative tech businesses and exporters.