03 March 2021
As expected, several tax rises were announced in today’s Budget but the good news is that they were much fewer than some had feared and their introduction has been delayed until future years.
The most significant tax change is an increase in the rate of Corporation Tax from 19% to 25%, but this will not start to bite until April 2023. The Chancellor was keen to add that a 25% tax rate is still the lowest in the G7 and furthermore many small companies will continue to pay tax at 19% where annual profits are below £50,000. The other main tax increase that was announced is the freezing of personal tax thresholds until 2026, but this stealth tax raising measure has also been deferred (until April 2022).
With the Government having recently set out its road map of businesses returning to a sense of normality by June, there was an expectation that the current support schemes would come to an end in June. Again, there was further good news when the Chancellor announced that many of the schemes (furlough; self-employed; 5% VAT for hospitality and tourism) will be extended until 30 September 2021. One slight disappointment is that the business rates holiday for the retail, leisure and hospitality sectors will only be extended until 30 June 2021, although a further 9 months extension at a heavily discounted rate helps to soften the blow as does the new Business Restart Scheme which will provide grants of up to £18,000.
There was also welcome news for individuals with the extension of the Universal Credit top-up for a further 6 months and the Stamp Duty Land Tax holiday for house purchases being extended until 30 June 2021 (with a further 3 months extension to 30 September, but at a lower threshold of £250,000 rather than the current £500,000 relief level).
As is often said, the “devil is in the detail” and one caveat to add to today’s limited tax rises is that various tax consultation documents are to be issued on 23 March and we do wonder if Rishi’s reprieve on higher taxes may be short-lived! Naturally we will provide an update later this month on any significant tax changes that are proposed in these consultation documents. In the meantime, we have provided detailed commentary below on the main tax changes announced in today’s Budget and if you have any queries, please do not hesitate to get in touch with your usual Dodd & Co contact or ask to speak to a specialist from one of our tax teams.
The Budget 2021 announcement covers the following topics:
- Capital Gains Tax
- Income Tax
- Corporation Tax
- Research & Development and Enterprise Management Incentives
- Capital Allowances & The Super Deduction
- Business Rates
- VAT
- Fuel & Alcohol Duties
- Inheritance Tax (& trusts)
- Personal Financial Planning
- Stamp Duty Land Tax
- Universal Credit & Working Tax Credits
- Covid Grants & Furlough
Please click here to read and download our Budget 2021 highlights.
If you have any queries on the 2021 Budget please do not hesitate to contact one of our tax specialists on 01228 530913 or 01768 864466.
