The Budget highlights and how they may affect you.
Rishi Sunak said in his budget statement that the outlook for unemployment looks more positive than originally anticipated. But, he added that the economic harm caused by coronavirus was “acute” and warned that it will take a “long time to recover”. He outlined a series of tax raising plans to help balance public finances and here are the highlights.
Corporation Tax
Part of his strategy will be to increase Corporation Tax in 2023 from 19% to 25% for businesses with profits of £250,000 or more. Businesses with profits of £50,000 or less will continue to pay 19%, whilst those declaring profits in between £50,000 and £250,000 will pay a tapered amount.
However, the chancellor did extend losses relief. For those companies making losses during the pandemic, the loss carry back period has been extended from the usual one year, to three years for the financial years 2020/21 and 2021/22.
Personal Tax
The personal allowance (the amount an individual can earn tax free) will increase from the current £12,500 to £12,570 on the 6 April 2021 and remain frozen until the tax year 2025/26. The basic rate limit (the amount of taxable income above which the 40% rate of income tax begins to apply) will increase from £37,500 to £37,700 on the 6 April 2021 and will remain frozen until the tax year 2025/26. Thus giving a combined tax free and basic rate band of £50,270. For further information click here.
Property
Stamp duty land tax remains at 0% up to £500,000 until the end of June 2021 but will then reduce to 0% up to £250,000 until the end of September 2021. To read more about this click here.
VAT
The VAT registration threshold will remain at £85,000 until 31 March 2024. The temporary 5% rate for certain supplies of hospitality, hotel accommodation, holiday accommodation and admission to visitor attractions which was due to end at 31 March 2021 will now be extended to 30 September 2021. This will be replaced with a new reduced rate of 12.5% for six months, to assist in the transition back to the standard rate of VAT.
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