The Chancellor has announced the 2021 UK Budget, but what does this mean for your business?
This budget has been eagerly awaited by the British public; it comes at a time of major economic uncertainty, nationally and internationally, due to events such as Brexit and the pandemic.
Business
These changes are crucial to business owners:
- From April 2023, Corporation Tax paid on profits will rise from 19% to 25%. Small businesses with profits of less than £50,000 will continue to pay £19%, with tapered thresholds
- Only businesses with profits of more than £250,000 (around 10% of all businesses) will pay Corporation Tax at 25%
- A 130% ‘super deduction’ will allow companies to reduce their tax bill when they invest in qualifying new plant and machinery
Payroll and Employment
If your business has employees, you’ll need to take note of these changes:
- The CJRS (furlough) scheme has been extended until 30th September 2021. Throughout May and June, the CJRS will operate as usual (80% remuneration) to allow flexibility whilst things adapt back to business as usual. From July onwards the amount will decrease. 70% remuneration for July, and 60% for August and September
Capital Taxes
There was much speculation around an increase in Capital Gains Tax (CGT) and wealth tax. However, there weren’t as many changes to capital taxes as expected.
- CGT annual exempt amount of £12,300 for individuals and £6,150 for (most) trustees are to stay the same until 2025/26
- The Inheritance Tax (IHT) nil-rate band has been frozen at its current level of £325,000 and residence nil-rate band has also been frozen at £175,000 until 5th April 2026
Income Taxes
It was also expected for there to be a change to Income Taxes.
The following freezes are relevant from 2021/22 to 2025/26:
- Personal allowance to be frozen at £12,570
- Basic and higher rate thresholds to be frozen at £37,700 and £50,270 respectively
- Pensions lifetime allowance frozen £1,073,100
For further information on the Budget 2021, checkout the gov.uk site.
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