Following the budget announcement from Rishi Sunak on Wednesday, we thought we would provide you with a quick summary of what the budget could mean for you.
Rates & allowances
The tax-free personal allowance throughout the UK will increase to £12,570 for the 2021/22 tax year. The basic-rate band will rise to £37,700, while the higher-rate threshold will rise to £50,270.
ISAs
All of the subscription limits will remain unchanged. For ISAs, this will be £20,000 and for Junior ISAs and child trust funds it will be £9,000.
Capital gains tax
The current annual exempt amount for individuals and personal representatives of £12,300 and £6,150 for trustees of settlements will be maintained at these levels for each tax year up to and including the 2025/26 tax year.
Pension lifetime allowance
The budget announcement highlighted that the lifetime allowance for pension savings will remain at £1,073,100 until the 2025/26 tax year.
Inheritance tax
The individual nil-rate band will continue at £325,000 and the residence nil-rate band will also remain at £175,000. The taper threshold for the residence nil-rate band continues to start at £2m.
Corporation tax
The main rate of corporation tax will remain at 19% for the financial years beginning 1 April 2021 and 1 April 2022. From 1 April 2023, the main rate will increase to 25% on profits over £250,000. A small profits rate will be introduced for companies with profits of £50,000 or less, which will continue to be charged at 19%. Only companies earning over £250,000 profit (the top 10%) will be taxed at 25%.
VAT thresholds
The VAT-registration threshold will be maintained at £85,000 for a further two years from 1 April 2022.
Stamp duty land tax (SDLT)
Budget 2021 announced a staged withdrawal of the SDLT, by extending it to 30 June 2021, then introducing a nil-rate band of £250,000 from 1 July 2021 to 30 September 2021. This will apply to transactions in England and Northern Ireland with an effective date between 1 April 2021 and 30 September 2021.
Mortgage guarantee scheme
A new mortgage guarantee scheme will begin from April 2021, providing a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000. The scheme will be available for new mortgages up to 31 December 2022.
Furlough Scheme / Universal Credit
This will be extended until the end of September, with no change to the terms until the scheme ends. This will help any tenants (and landlords) or those owning a home to continue to pay their bills. The self-employed grant scheme will also continue and a further 600,000 individuals could now be eligible, as long as they have submitted their latest tax return.
Read our take on the 2021 budget here.
If you are a landlord, homeowner, or someone that would like to review their current financial situation and would like any advice on the above budget announcements please get in touch.