The Chancellor described his second Budget, which needed to introduce the notion of fixing public finances whilst continuing to support those still struggling as a result of Coronavirus, as ‘meeting the moment’ and, in some respects, it did. However, as always, there were a few announcements to be looked upon less favourably. In this article, we round up the key headlines and address what these mean for you.
A four-year freeze for Personal Allowances and Income Tax bands
From 5 April 2022, the Personal Allowances and Income Tax bands will be frozen for a period of at least four years – an unparalleled move and one that will see many more individuals pay tax, and some at higher rates than they would have done previously.
Corporation Tax rates changing
Accounting for the financial support afforded to businesses throughout the pandemic, the Chancellor saw fit to target the most profitable companies as a means of beginning to repair public finances.
From April 2023, the top rate of Corporation Tax will increase to 25 per cent for companies with profits exceeding £250,000, whilst a ‘Small Profits Rate’ will see companies with profits below £50,000 continue to pay Corporation Tax at 19 per cent. This will mean a marginal rate of Corporation Tax, which introduces a 26.5 per cent rate for those with profits between the lower and upper thresholds.
…but, what about the Super-deduction?
In a bid to offset the rate increases and encourage continued investment, the Chancellor also announced a ‘super-deduction’; a valuable relief for businesses with plans to invest large sums into capital equipment.
Companies with qualifying expenditure, between 1 April 2021 through to 31 March 2023, can claim a 130 per cent deduction on most new plant and machinery that would have qualified for AIA or the 18 per cent main rate Writing Down Allowance (WDA).
Transitional rules apply and so any company considering taking advantage of this relief would be wise to speak to a professional, to ensure that sufficient care is taken to time investments just right.
Stamp Duty holiday extended
The temporary Stamp Duty holiday, announced in the Chancellors 2020 Budget, was due to end on 31 March 2021. However, with the sheer volume of transactions generated causing significant delays for many house-buyers, thousands voiced their concerns about not completing in time to benefit. Consequently, the Government has agreed to extend the holiday until 30th June 2021, with a phased increase thereafter.
Coronavirus support for businesses and individuals
With many still experiencing financial difficulty, the Chancellor extended and bolstered a number of existing support measures including the furlough scheme, the SEISS, government-backed loans and grants for impacted businesses (non-essential retail, for example).
How can George Hay help?
If you’re concerned about any of the announcements in the latest Budget or if you have questions about how your business will be impacted, we encourage you to get in touch with us.
For a comprehensive summary of the key details included in the Chancellor’s Budget, you can read our 2021 Spring Budget Summary.