The chancellor, Rishi Sunak has today set out his second budget since he joined office in 2020.
Although there were little surprises from the information already released in the media, we set out our highlights below, which covers Business and COVID-19 Support, Personal Income & Taxes, Company Taxes and IR35.
Business and COVID-19 Support
Some welcome extensions to reliefs for business:
+ The furlough scheme is to be extended to September 2021.
+ The business rates holiday relief will continue until June 2021, and thereafter there will be a 75% reduction in rates.
+ The reduced VAT available to the hospitality sector of 5% (instead of the standard 20%) will continue until September 2021 – with an interim rate of 12.5% for the following six months.
+ A relief for businesses that undertake capital investment, with 130% (of the expenditure) being deductible from taxable profits.
+ The stamp duty holiday on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000.
Personal Income & Taxes
The headlines from a personal tax perspective:
+ There will be no changes in rates of income tax, national insurance or VAT.
+ The personal income tax allowance is going to be frozen at £12,570 from April 2022 to 2026.
+ The higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026.
+ There are to be no changes to inheritance tax. Lifetime pension allowance or capital gains tax allowances.
+ Alcohol & fuel duties have again been frozen, to minimise household expenditure.
There was expected to be an increase to corporation tax in this budget and the chancellor confirmed:
+ The rate of corporation tax on company profits is going to rise from 19% to 25% in April 2023.
+ For smaller companies, with profits of less than £50,000, the rate will be kept at 19%.
IR35 Off-Payroll Working April 2021
The introduction of changes to IR35 in the private sector, coming into force in April 2021, were not mentioned in the budget. Therefore, as expected, there will be no delay in these reforms.
If you’re unsure what the IR35 changes mean for you please speak to your accountant or take a look at our IR35 Hub.