1) Income tax rates are frozen for 2021/22 and while the personal allowance and higher rate threshold will increase by inflation in 2021/22 (to £12,570 and £50,270 respectively), they will both be frozen from 2022 to 2026. (Different rates and thresholds have already been set for Scottish taxpayers by the Scottish Budget.)
2) The annual exempt amount and rates for capital gains tax are frozen despite talk of increases; the inheritance tax nil rate band is re-frozen at £325,000 until at least 2026 (now unchanged since 2009).
3) The furlough scheme has been extended until 30 September 2021. Employer contributions under the scheme will increase to 10% in July and rise further to 20% for August and September. Fourth and fifth grants for the self-employed income support scheme have been introduced and extended to anyone who filed a tax return for 2019-2020 by 2 March 2021.
4) The rate of corporation tax will increase to 25% from 2023 for profits in excess of £250,000, with a small profits rate of 19% for companies with profits of £50,000 or less. A tapered rate will apply for companies with profits between £50,000 and £250,000.
5) A new ‘super deduction’ will allow companies to offset up to 130% of investment in new qualifying plant and machinery against tax for the next two years.
6) Businesses will be able to carry back losses of up to £2m for up to three years, allowing potential tax refunds of up to £760k for 2020-21 and 2021-22 (with restrictions for groups).
7) The temporary increase in the SDLT residential nil rate band to £500,000 is extended until the end of June, reducing to £250,000 from 1 July until the end of September and returning to £125,000 on 1 October 2021. In Scotland, by comparison, the temporary increase in the LBTT nil rate band will end on 31 March 2021.
8) The 5% VAT rate applicable to hospitality, accommodation and attractions is extended for six months to 30 September 2021, and for the six-month period from 1 October 2021 the rate increases to 12.5%. The standard rate will not apply until April 2022.
9) Eight freeport sites were announced across England, with a commitment to introducing them across the rest of the UK. Businesses in designated freeport areas will benefit from several tax reliefs (including relief from SDLT, business rates and employers’ NICS), enhanced capital allowances and simpler customs procedures.
10) The freeze on alcohol duty and fuel duty will continue in 2021-22. Any future revisions to fuel duty rates will be considered alongside commitments to reach net-zero emissions by 2050.
Contributors
Director of Corporate Tax
Partner
Director of Personal Tax
Partner
Partner
