We are pleased to share with you our summary of the key announcements made in the Budget on Wednesday 3rd March. The structure of this Budget, like its predecessor, was driven by the pandemic’s impact on the economy. With some form of lockdown continuing over the next few months, Mr Sunak extended the main employment support schemes through to 30th September and added further grants and loans to assist struggling businesses.
The total cost of his pandemic measures in this tax year and the next are now projected to be greater than the amount that will be raised in income tax over the same period. How the government can claw back that expenditure, while rebuilding the economy, formed the focus of the Chancellor’s speech.
Some of the other highlights were:
- The expected freezing until April 2026 of the main allowances, thresholds and exemptions for income tax, capital gains tax and inheritance tax.
- The self-employment income support scheme being extended through until the end of September to allow more to claim.
- The rules for how much you can invest in tax efficient pensions and ISAs remain unaffected as does the taxation of income and gains from investment.
- The extension of the Stamp Duty Land Tax cut until the end of June and the new Mortgage Guarantee Scheme delivering mortgages with the need for only 5% deposits will both be of interest to those looking to buy their first (or perhaps another) home or move.
- A freeze in the Lifetime Allowance of £1,073,100 until 2025/26.
- The proposed increase in the corporation tax rate to 25% from 1st April 2023. However, this rate will only apply once profits hit £250,000 and if profits are below £50,000 the current 19% rate will continue to apply. There will be a sliding scale for profits in between.
- New provisions for all businesses to allow losses to be carried back for three years.
- A new “super deduction” for companies who incur qualifying capital expenditure. This super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest.
For further details please click on the following link to: Technical Connections Budget Analysis – Spring 2021