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03 March 2021

UK Budget 2021 | The Highlights


Analysis and commentary from FPM’s team of tax experts, identifying the key changes and outlining the practical implications for you and your business.

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UK Budget Summary 2021

The 2021 UK Budget was announced today (3 March) by the Chancellor of the Exchequer, Rishi Sunak.   

This is only his second Budget, and it comes amid major economic uncertainty both in the UK and internationally. In his 2020 Budget, Mr Sunak promised to ‘unleash the country’s potential’, but the UK subsequently faced a global pandemic and a protracted withdrawal from the EU.

These two challenges have significantly changed the economic position of the country and resulted in record levels of government debt.

Will this Budget deliver the economic growth the UK urgently needs?


Budget Highlights

Rishi Sunak has delivered a mixture of new tax increases and tax reliefs aimed at supporting struggling business sectors and addressing the national debt. Income tax, CGT and national insurance rates remain unchanged. The personal allowance and the higher rate threshold will be frozen from 2021/22 to 2025/26. Businesses will enjoy a new ‘super deduction’ on capital investments and the temporary three-year carry back on losses. Corporation tax will be increased to 25% from April 2023 – though smaller businesses will be protected from this tax burden by a new small profits rate.

The detail of how this will work will be announced 23 March, when the Chancellor lays out new tax consultations and calls for evidence. Then we hope to have more insight into the future direction of the Government’s tax policy for the UK.


Business Taxes

Key Highlights
  • The main rate of corporation tax is to increase from 19% to 25% from April 2023
  • A new small profits corporation tax rate of 19% will be introduced in April 2023
  • A 130% ‘super deduction’ will be introduced for capital investments in qualifying new plant and machinery
  • Trading losses can temporarily be carried back for three years

Capital Taxes

Key Highlights
  • The current CGT annual exempt amounts of £12,300 for individuals and £6,150 for most trustees are to remain the same up to and including the 2025/26 tax year.
  • The current CGT annual exempt amounts of £12,300 for individuals and £6,150 for most trustees are to remain the same up to and including the 2025/26 tax year.
  • The IHT nil-rate band and residence nil-rate band have also been frozen at their current levels of £325,000 and £175,000 respectively, until 5 April 2026

Income Taxes

Key Highlights
  • Personal allowance to be frozen at £12,570 from 2021/22 to 2025/26.
  • Basic and higher rate income tax thresholds to be frozen at £37,700 and £50,270, respectively, from 2021/22 to 2025/26.
  • Pensions lifetime allowance frozen at current level of £1,073,100 from 2021/22 to 2025/26.

VAT and indirect taxes

Key Highlights
  • The stamp duty land tax holiday on property up to £500,000 will be extended by three months to 30 June 2021, then tapered off until 30 September.
  • The temporary 5% reduced rate of VAT for hospitality and tourism businesses will be extended by six months, followed by a 12.5% rate for six months.
  • The VAT registration threshold will remain fixed at £85,000 until 31 March 2024.

 

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As accountants and tax advisers, we can advise on how these changes will affect you and your business. For more information on this year’s budget statement, contact our Tax Team.

FPM’s Tax Division is made up of All Island Tax Specialists who are based both North and South of the Irish border. This means our Tax Team are experts on the intricacies and complex reporting requirements of both tax jurisdictions on the Island of Ireland, ensuring we provide the best possible advice to our clients.

Talk to us now for advice on making the most of the opportunities available to you and your business this year.

Contact Seamus

Seamus McElvanna / Senior Manager

s.mcelvanna@fpmaab.com

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