Budget 2021 – The Road to Recovery?

First published on 03 March 2021 by Alastair
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With the ongoing concern surrounding the coronavirus situation, today’s budget focused on the continued support of businesses, employment and the investment required to assist the UK recover from the pandemic and help build towards a stronger economy. To that extent the Budget delivered for most although in our view the extension of the Self Employed income Support is disappointing as it doesn’t go far enough and still  leaves far too many ’self-employed’ people excluded. In many cases people will not have had any significant income for over a year. At least there were no real unwelcome surprises.

The main stand out announcements from the budget were in connection with the furlough scheme extension, grants to assist businesses reopen after lockdown, we might have to wait a little while for how this will apply in Scotland given the current events at Holyrood, and the freezing of various tax rates until April 2026. The biggest tax announcement today was the increase in the corporation tax to 25% from April 2023 but again that is at least not straight away and will not apply to many smaller companies. A fuller summary will be provided once we have worked through everything announced and evaluate how they affect our clients. 

The updated tax rates and allowances can be found here:

The Budget – Tax rates for the year ended 5 April 2022

Following the Budget, the tax rates for the year ended 5 April 2022 tax year will be as follows: 

Income Tax Rates

Individuals UK

 

 

 

 

Rate of tax

Basic rate

£12,570 - £50,270

20%

Higher rate

£50,271 - £150,000

40%

Additional rate

Over £150,000

45%

 

 

 

Individuals – Scottish Income Tax

 

 

 

 

 

Starter rate

£12,570 - £14,667

19%

Basic rate

£14,668 - £25,296

20%

Intermediate rate

£25,297 - £43,662

21%

Higher rate

£43,663 - £150,000

41%

Additional rate

Over £150,000

46%

 

 

 

Individuals - Dividends

 

 

 

 

 

Basic rate

£12,570 - £50,270

7.5%

Higher rate

£50,271 - £150,000

32.5%

Additional rate

Over £150,000

38.1%

 

Income Tax Allowances

Personal Allowance

£12,570

Married/civil partners allowance

£9,075

Minimum Married/civil partners allowance

£3,530*

Married/civil partners transferable allowance

£1,260

Income limit for married/civil partners allowance

£30,400

Blind persons allowance

£2,520

Rent a room relief

£7,500

Savings allowance

£1,000

Trading allowance

£1,000

Property income allowance

£1,000

Dividend allowance

£2,000

 

* Reduced by £1 for every £2 income over £100,000 after applying personal allowance reduction.

Capital Gains Tax Rates

Residential Property

 

 

 

 

Rate of tax

Basic rate

£12,300 - £50,270

18%

Higher rate

Over £52,270

28%

 

 

 

Other

 

 

 

 

 

Basic rate

£12,300 - £50,270

10%

Higher rate

Over £52,270

20%

 

Capital Gains Tax Allowances

Annual exemption

£12,300

 

Inheritance Tax Rates

Nil Rate

£0 to £325,000

0%

Residence Nil Rate*

£325,001 to £500,000

0%

Standard Rate

Over £500,000

40%

 

* Conditions apply.

 

 

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