It is less than a year since Rishi Sunak presented his first budget, after having been in the role of Chancellor for less than a month. His despatch box premiere featured an allocation of \u00a312bn towards mitigating the impact of Covid-19. Ironically, on the same day as Mr. Sunak revealed that boost to spending, the World Health Organisation declared the outbreak a pandemic. Total expenditure on dealing with the pandemic is now estimated to be around \u00a3300bn. <\/p>\n\n\n\n
The March 2020 Budget was what should have emerged in the\nAutumn of the previous year, before being deferred because of the General\nElection. The March 2021 Budget is the\nresult of a similar delay. Last\nSeptember the Chancellor decided that the uncertainties created by the pandemic\nmeant it wisest that he waited until Spring 2021 to present the Budget. Since then, Mr Sunak has been kept busy\nannouncing extensions to the various Covid-19 support schemes introduced in\n2020. Whether the Chancellor feels the\neconomic outlook today is much clearer than six months ago is a moot point. <\/p>\n\n\n\n
One financial aspect which has been painfully clear for some\ntime is that the government\u2019s finances have been fundamentally changed by the\npandemic. A year ago, the Office for\nBudget Responsibility (OBR) forecast that the government would borrow around\n\u00a355bn in 2020\/21. Twelve months later\nits estimate has risen to \u00a3400bn. The\ncoming year, 2021\/22, should see borrowing more than halve according to the\nOBR, but the deficit is still projected to be running at over \u00a3160bn \u2013 more\nthan three times the figure of just two years ago.<\/p>\n\n\n\n
Dealing with this level of borrowing is probably not what Mr. Sunak signed up for when he moved into 11 Downing Street. He now has to deal with total government debt of about \u00a32,100bn, equal to the UK economic output for the year. The last time debt was as high was in the early 1960s, when the UK was still in the business of paying down the bills incurred in World War II.<\/p>\n\n\n\n
Despite the lake of red ink, Mr. Sunak was never going to introduce significant tax increases in this Budget. For a start, nearly all economists, regardless of political hue, were saying that economic recovery was the priority and sorting out the debt could wait. Secondly, Mr. Sunak\u2019s boss, Boris Johnson, cannot even bring himself to mention the A-word (austerity) which would ruin his \u2018leveling up\u2019 agenda. As a result, the Budget was one of tax pain largely deferred.<\/p>\n\n\n\n
The proposals of most interest were:<\/p>\n\n\n\n
The addition of \u00a370 to the personal allowance and \u00a3200 increase in the basic rate band, in line with indexation requirements. However, after 2021\/22, the personal allowance and higher rate threshold (outside Scotland) will be frozen for four tax years.<\/p>\n\n\n\n
The inheritance tax nil rate band, the pensions lifetime allowance and the capital gains tax annual exemption will all be frozen at their current levels for the next five tax years.<\/p>\n\n\n\n
For companies with profits of over \u00a3250,000, in April 2023 the rate of corporation tax will jump by 6% to 25%. A new smaller companies\u2019 rate of 19% for companies with profits of up to \u00a350,000 will be introduced at the same time. <\/p>\n\n\n\n
A new ‘super-deduction\u00b7 130% first-year allowance will be introduced for companies investing in plant and machinery between 1 April 2021 and 31 March 2023.<\/p>\n\n\n\n
The temporary \u00a3500,000 0% band for stamp duty land tax will continue to apply for residential property purchases up to 30 June 2021. The band will then be halved for the following three months before reverting to its original \u00a3125,000 level from 1 October.<\/p>\n\n\n\n
The coronavirus job retention scheme (CJRS – furlough scheme) and the self-employed income support scheme will be extended to September, albeit with reductions in the final three months of their life.<\/p>\n\n\n\n
The business rates holiday for retail, hospitality, and leisure businesses will also be extended. Until June 2021 100% relief will apply and thereafter reduced (and capped) 66% relief will operate until the end of March 2022.<\/p>\n\n\n\n
12\nQuick Tax Tips<\/strong><\/p>\n\n\n\n 1. Don’t waste your (or your partner’s)\n\u00a312,570 personal allowance in 2021 \/22.<\/p>\n\n\n\n 2. Don’t forget the personal savings\nallowance, reducing tax on interest earned.<\/p>\n\n\n\n 3. Don’t ignore the dividend allowance,\neliminating tax on \u00a32,000 of dividends.<\/p>\n\n\n\n 4. Don’t dismiss National Insurance\ncontributions – they are really a tax at up to 25.8%.<\/p>\n\n\n\n 5. Think marginal tax rates – the system\nnow creates 60% (and higher) marginal rates.<\/p>\n\n\n\n 6. ISAs should normally be your first\nport of call for investments and then deposits.<\/p>\n\n\n\n 7. Even if you are eligible for a LISA.\nyou still might find a pension is a better choice.<\/p>\n\n\n\n 8. Tax on capital gains is usually lower\nand paid later than tax on investment income.<\/p>\n\n\n\n 9. Trusts can save inheritance tax but\nsuffer the highest rates of CGT and income tax.<\/p>\n\n\n\n 10.\n File your tax return on time to\navoid penalties and the taxman’s attention.<\/p>\n\n\n\n 11. If you are entitled to a company car,\ngoing hybrid or electric could slash your tax bill.<\/p>\n\n\n\n 12. Don’t assume HMRC won’t know automatic information exchange is now widespread.<\/p>\n\n\n\n If you need further information on how you will be affected personally, you are strongly recommended to consult your financial adviser. If you would like one of our Advisors to review your finances, are unsure of how your portfolio is performing, or want to look at alternate ways to get a good return on your savings and pensions, please call us on 0114 235 3500 for a free initial meeting. <\/strong><\/p>\n\n\n\n Our office is operating as normal but we can also offer appointments by telephone or Facetime, Microsoft teams & Zoom.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" It is less than a year since Rishi Sunak presented his first budget, after having been in the role of Chancellor for less than a month. His despatch box premiere featured an allocation of \u00a312bn towards mitigating the impact of Covid-19. Ironically, on the same day as Mr. Sunak revealed that boost to spending, the … Continue reading “Spring Budget 2021”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-377","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/posts\/377","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/comments?post=377"}],"version-history":[{"count":5,"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/posts\/377\/revisions"}],"predecessor-version":[{"id":382,"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/posts\/377\/revisions\/382"}],"wp:attachment":[{"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/media?parent=377"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/categories?post=377"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hamnettwealth.com\/news\/wp-json\/wp\/v2\/tags?post=377"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}