A Budget continuing pandemic support but with an eye on the UK’s long-term economic recovery

4th March 2021

The headlines following Rishi Sunak’s budget yesterday heralds a UK tax burden to hit the highest levels since the 1960s as the lifetime allowance for pension savings along with the thresholds for inheritance tax, capital gains tax and VAT, raising a further £2.5 billion, are all frozen. However, it is also a budget focused on continued support, in the short-term, to help businesses and jobs to continue to survive the pandemic.
The key points are:

COVID-19 Support

  • Furlough extended until September but with employer contributions to increase from July 2021.
  • Support for the self-employed also to be extended until September with 600,000 more eligible for help as access to grants is widened.
    Read more here.

TAXATION

  • Personal:
    Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026.
    Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026.
    Minimum wage to increase to £8.91 an hour from April.
    The lifetime allowance for pension savings will be frozen at £1,073,100 until the 2025/26 tax year.
    Read more here.
  • Business:
    Corporation tax on company profits to rise from 19% to 25% in April 2023. Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
    Read more here.
  • VAT:
    Lower VAT rate for hospitality firms to be maintained at 5% rate until September, an interim 12.5% rate will then apply for the following six months.
    Read more here.

OTHER ANNOUNCEMENTS:
Stamp duty holiday on house purchases in England and Northern Ireland is extended to 30 June and a new mortgage guarantee scheme starts in April.
A number of other announcements look at a new points-based penalty regime for late payments and submissions and highlights other amendments to duties and levies.
Read more here.
Download full Spring Budget Report here.