Neils Limited Chartered Accountants Tel:01442 24 24 91 Hemel Tel:0208 343 6091 London
Neils LimitedChartered AccountantsTel:01442 24 24 91 HemelTel:0208 343 6091 London

BUDGET 2021 INSIGHT

 

The message from the Chancellor was that this is a Budget with three aims:

 

  • protecting the jobs and livelihoods of the British people
  • strengthening the public finances
  • supporting an investment-led recovery

 

You can read the individual measures and details of some of the numerous consultations below.

 

Rates and allowances
 

 

2021/22

2020/2021

 

       £

       £

Income tax rates (non-dividend income)

0% lower rate tax – savings rate only

Up to 5,000

Up to 5,000

20% basic rate tax

12,571 to 50,270

12,501 to 50,000

40% higher rate tax

50,271 to 150,000

50,001 to 150,000

45% additional rate tax

Above 150,000

Above 150,000

Scottish income tax rates (non-dividend income)

19% starting rate tax

12,571 to 14,667

12,501 to 14,585

20% basic rate tax

14,668 to 25,296

14,586 to 25,158

21% intermediate rate tax

25,297 to 43,662

25,159 to 43,430

41% higher rate tax

43,663 to 150,000

43,431 to 150,000

46% top rate

Above 150,000

Above 150,000

Personal allowance

Personal allowance

12,570

12,500

 

Capital gains tax annual exempt amount (after personal allowance)

These are frozen at £12,300 for individuals and £6,150 for trusts.

 

Dividend allowance

The tax-free dividend allowance is unchanged at £2,000.

 

Corporation tax

The corporation tax rate will remain at 19% but from April 2023 the applicable corporation tax rates will be 19% and 25%. Businesses with profits of £50,000 or below will still only have to pay 19% under the small profits rate.

 

Grants – restart

‘Restart Grants’ are available in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses

 

Grants - export

The SME Brexit Support Fund grant provides up to £2,000 to help with training or professional advice.

 

Enhanced capital allowances: super deduction

This introduces increased reliefs for expenditure on plant and machinery. For qualifying expenditures incurred from 1 April 2021 up to and including 31 March 2023, companies can claim in the period of investment:

  • a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main-rate writing-down allowances
  • a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances

Annual investment allowance (AIA)

Companies will be able to claim £1m as AIA for expenditure incurred from 1 January 2019 to 31 December 2021. The announcement was made in November and before the ‘super deduction’.

 

Apprenticeship funding

Apprenticeship incentive payments for employers will increase to £3,000 per new hire until September 2021.

 

Making tax digital (MTD)

There were no announcements on MTD except that the government will publish an evaluation on the introduction of MTD for VAT, expected on 23 March.

 

VAT
 

 

2021/22

2020/21

 

£

£

VAT

Standard rate

20%

20%

Registration threshold

85,000

85,000

Deregistration threshold

83,000

83,000

 

The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022.

 

The reduced rate of VAT of 5% to the hospitality, holiday accommodation and attractions sector is extended until 30 September 2021. After this date, the VAT rate will be 12.5% to the end of 31 March 2022, before returning to the standard rate of VAT of 20% from 1 April 2022.

 

 

VAT deferral

Businesses with outstanding VAT from last year may join the VAT deferral new payment scheme to spread their payments. The online service is open until 21 June 2021.

 

VAT deferral

If you deferred VAT payments due between 20‌‌ ‌March and 30‌‌ ‌June 2020 and still have payments to make, you should pay by 31‌‌ ‌March 2021 if you can.

If you cannot afford to pay by 31‌‌ ‌March this year, you can now use the online VAT deferral new payment scheme to spread your payment.

The new scheme lets you pay your deferred VAT in equal monthly instalments, interest free. You can spread your payments across a number of months depending on when you join – the earlier you join, the more months you have to spread your payments across.

  • 11 instalments if you join by 19‌‌ ‌March
  • 10 instalments if you join by 21‌‌ ‌April
  • 9 instalments if you join by 19‌‌ ‌May
  • 8 instalments if you join by 21‌‌ ‌June.

You can join the scheme quickly and simply online without the need to call HMRC. To find out more information, including the things you need to do before joining, go to GOV‌‌‌.UK and search 'VAT deferred'.

The online service will close on 21‌‌ ‌June 2021 – if you want to join the scheme online, you must do so before this date.

If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you’ll be able to join the new payment scheme later in March. We will share more information on this shortly.

If you have a Time to Pay arrangement already in place for your deferred VAT, you cannot use the online scheme. If you need to amend your Time to Pay arrangement, contact HMRC to do this.

 

 

Coronavirus Job Retention Scheme (CJRS)

An extended version of the CJRS provides further support for employees until the end of September 2021.

 

Self-Employment Income Support Scheme (SEISS)

A fourth grant will open from late April and will be available until 31 May 2021, and will include those self-employed in the tax year 2019/20, with the SEISS being available for a 5th grant until September 2021  based on turnover.

 

Losses

Trading losses will have more flexibility to carry them back over three years. This applies only for losses incurred by companies for accounting periods ending between 1 April 2020 and 31 March 2022, and for individual for trade losses of tax years 2020/21 and 2021/22.

 

 

Entrepreneurs’ relief

The lifetime limit on gains eligible for entrepreneurs’ relief is £1m for qualifying disposals.

 

Employment allowance reform

The allowance is £4,000 but continues to be limited to employers with an employer NIC bill below £100,000 in the previous tax year.

 

Statutory sick pay (SSP)

Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. As with other pandemic-related business support schemes, the government will set out steps for closing this scheme in due course.

 

Apprenticeships

SMEs should register on the apprenticeship employer hub before the end of the month to benefit from apprenticeship levy funding. You can find out more about ACCA Apprenticeship Programmes.

 

R&D

From 1 April 2021, SMEs applying for R&D tax credits will be eligible to a maximum of £20,000 in repayments per year plus three times the company’s total PAYE and NIC liability.


Inheritance tax (IHT)

The nil-rate band remains at £325,000. The residence nil-rate band for deaths in the following tax years are:

 

  • £100,000 in 2017/18    
  • £125,000 in 2018/19
  • £150,000 in 2019/20    
  • £175,000 in 2020/21
  • £175,000 in 2021/22

 

 

 

Time to pay

Taxpayers can set up a payment plan online via GOV.UK.

 

Pensions

The pension lifetime allowance will remain at its current level of £1,073,100 until April 2026.Rates

100% relief for businesses in retail, hospitality and leisure in England continues until June 2021. From July 2021 to March 2022, these business will pay a reduced rate of 33%. Businesses in England closed due to national lockdowns from 5 January 2021 onwards, or between 5 November and 2 December 2020, may be eligible for grants.

 

Interest relief for landlords

Landlords will be able to obtain relief as follows:

 

                                      Finance cost allowed in full           Finance cost allowed at basic rate

Year to 5 April 2020                            25%                                                                 75%

Year to 5 April 2021                              0%                                                                 100%

 

Stamp duty land tax (SDLT)

Non-UK residents are to pay 2% surcharge SDLT on residential property purchases from April 2021. The SDLT nil-rate band of £500,000 for residential property purchases in England and Northern Ireland will be extended to June 2021, reducing to £250,000 from July to September and reverting to £125,000 from October 2021.

 

Annual tax on enveloped dwellings (ATED)

The ATED charges increase automatically each year in line with inflation (based on the previous September’s Consumer Prices Index).

 

 

2021/22

 

2020/21

 

£

 

£

Annual tax on enveloped dwellings (ATED)

More than £0.5m but not more than £1m

3,700

 

3,700

More than £1m but not more than £2m

7,500

 

7,500

More than £2m but not more than £5m

25,300

 

25,200

More than £5m but not more than £10m

59,100

 

59,850

More than £10m but not more than £20m

118,600

 

118,050

More than £20m

237,400

 

236,250


 

March 2021

 

ACCA LEGAL NOTICE

This is a basic guide prepared by ACCA UK's Technical Advisory Service for members and their clients. It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where required.

 

Address

109B High Street

Hemel Hempstead

Herts HP1 3AH

Tel: 01442 242491

 

The Brentano Suite

Solar House

915 High Road

London  N12 8QJ

Tel: 0208 343 6091

 

 

 

 

 

 

Making an appointment

If you have an enquiry or wish to make an appointment please contact us:

 

London : 0208 343 6091

Hemel :  01442 24 24 91

Email: neil@neiltax.london

 

 

 

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