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Key takeaways from the Chancellor’s 2021 Budget

For a quick overview of the key points from the Chancellor's Budget on 3 March 2021, here are the key takeaways.

4 March 2021

If you are short of time but want a quick overview of the implications from the Chancellor's Budget on 3 March 2021, our specialist team have compiled a list of the key takeaways.  For more detail and a comprehensive overview, download our 2021 Budget Summary pdf guide or contact one of the team.

 

Personal tax

Income tax and National Insurance Contributions

 

Van benefit charge

The van benefit charge increased to £3,500; the multiplier for the car fuel benefit increased to £24,600; and the flat-rate van fuel benefit charge increased to £669.

 

Capital gains tax

Capital gains tax rates have remained unchanged.  The Capital gains tax annual exemption is also unchanged and will remain so until April 2026.

 

Inheritance tax

Inheritance tax bands will remain unchanged until April 2026.

 

Investments and Pensions

The Social Investment Tax Relief was to end at 5 April 2021, but has now been extended to 5 April 2023.

The Pension Lifetime allowance is unchanged and will remain at this level until April 2026.

 

Property

Stamp Duty Land Tax is unchanged except that the £500,000 residential nil rate band (save for the 3% uplift) will continue to 30 June and then fall to £250,000 until 30 September 2021.

 

Business taxes

VAT

VAT rates remain unchanged except that the 5% rate for hospitality, hotel and holiday accommodation and admission to certain attractions will continue until 30 September 2021. It will then drop to 12.5% for the six months to 31 March 2022.

VAT registration and de-registration thresholds are unchanged and will remain so until March 2024.

 

Corporation tax

The Corporation tax rate is currently unchanged but will increase to 25% from April 2023.  A small profits rate of 19% will apply for profits not exceeding £50,000, with taper relief up to £250,000. Note, the small profits rate will not apply to close investment-holding companies.

 

Capital allowances

A super-deduction of 130% of the cost is to be available for companies’ expenditure on plant and machinery in the two years ending 31 March 2023. In effect such capital expenditure in those two years gets tax relief at 24.7%, almost the same rate as would apply later, with a 25% corporation tax rate. There is also a 50%  first year allowance for expenditure on special rate assets for the two years ended 31 March 2023.

 

Other business tax changes

The annual investment allowance continues at £1 million for expenditure to 31 December 2021.

Corporate losses and those of unincorporated businesses up to £2 million of 2020/21 and 2021/22 may be carried back to be relieved against earlier profits up to 3 years.

There are changes proposed to the Off-Payroll regime.

 

Government support in response to the pandemic

 

Freeports

Freeports are to be created in eight locations in England. These will have tax reliefs and simplified customs procedures. Discussions continue with the devolved administrations to ensure freeports will be established in Scotland, Wales and Northern Ireland. The effective date is 9 March 2021.

There will be a 100% enhanced capital allowance available to companies for qualifying expenditure on plant and machinery for use within Freeports. This will be available for expenditure incurred on or after the date the Freeport is designated until 30 September 2026.

There will also be a 10% enhanced rate of Structures and Buildings Allowance (SBA), available for businesses on qualifying expenditure for the construction of new, and renovation of existing, non-residential structures and buildings within Freeports.

The enhanced SBA will be available for qualifying assets brought into use after the date the Freeport is designated and on or before 30 September 2026.

 

Other tax-related changes and developments

 

Interest and penalty regime

A new points-based penalty regime for regular tax return submission obligations replaces existing penalties for VAT, income tax and capital gains tax. The VAT interest rules will change and will be similar to those that currently exist for income tax and capital gains tax.

 

Can we help?

For further information and advice, please talk to your usual Shipleys' contact or call one of our offices

London: t +44 (0)7312 0000  e: advice@shipleys.com

Godalming: +44 (0) 1483 423607  e: godalming@shipleys.com

 

This Budget Summary is based on the Chancellor’s Budget Statement on 3 March 2021, supplemented by information from official publications.

It reflects our understanding of proposed changes to tax law and practice at the date of publication, but is not a complete and definitive guide. The Budget proposals may be amended before the Finance Bill becomes law.

 

Specific advice should therefore be obtained before taking action, or refraining from taking action, on the basis of this information.

© 2021 Shipleys LLP

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