Below is a summary of the key changes announced by UK Chancellor, Rishi Sunak, today 3rd March 2021:
- The personal income tax allowance will be frozen at £12,570 from April 2022 to 2026.
- The higher rate income tax threshold will be frozen at £50,270 from 2022 to 2026.
- The pensions lifetime allowance (LTA) has been frozen at £1.07m until 2026.
- Income tax, national insurance and VAT remain unchanged.
- There are no changes to capital gains tax or inheritance tax.
- Corporation tax will rise from 19% to 25% in April 2023.
- These new rates, however, will be kept at 19% for smaller companies with profits of less than £50,000.
- £25bn has been pledged towards a “super deduction” tax break to spur investment and kick-start a recovery from the COVID-19 pandemic. The two-year tax break will allow companies to deduct 130% of their investment from their taxable income.
- There is an extension of the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.
- £5 billion pledged for new Restart Grants in England. This is a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses.
- Contactless payment limit will rise to £100 later in the year, but no date has been confirmed.
- Gyms and other non-essential retail premises in England will the business rates holiday extended for another three months until June.
- Stamp Duty Land Tax (SDLT) holiday has been extended to the end of June for England and Northern Ireland.
- The nil rate band will then fall to £250,000 from July until the end of September. It will then return back to £125,000 on 1 October 2021.
- A new mortgage guarantee scheme will enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit.
- Small and medium sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) cost per employee from the Government.
- In an effort to protect people’s jobs, furlough has been extended until the end of September 2021. This will require employers to contribute 10% in July and 20% in August respectively.
- There has been an extension of the UK-wide Self Employment Income Support scheme (SEISS) to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
- Two further grants under the SEISS will be made available for self-employed people still struggling to work because of the COVID-19 pandemic.
Universal Credit, Working Tax Credit and minimum wage
- The £20 uplift in Universal Credit worth £1,000 a year is to be extended for a further six months.
- Working Tax Credit will get £500 one-off payment.
- In April, minimum wage is set to increase to £8.91 an hour.
- Scotland will receive £1.2bn of funding in 2021-22.
- £27 million has been pledged in the Aberdeen Energy Transition Zone and £5 million in the Global Underwater Hub in Scotland as part of the first stage in delivering the North Sea Transition Deal.
- Three Growth Deals in Scotland – Ayrshire, Argyll & Bute, and Falkirk – will receive funding more quickly.
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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.