Rishi Sunak has delivered his budget for 2021 flagging tax rises as total Covid spending tops GBP400BN. The chancellor says the economy will recover more quickly from the pandemic than previously thought, with the economy returning to its pre-pandemic state by the middle of next year (2022). This comes after the economy shrank by 9.9% in 2020, the biggest fall since 1709.
A summary of Chancellor Rishi Sunak’s economic plan to support the UK’s recovery from the COVID19 pandemic.
- Coronavirus Job Retention Scheme (CJRS) is extended to September 2021.
- Self-employment income support scheme (SEISS): two further grants.
- SEISS: newly self-employed may now qualify for these later grants.
- Changes to the taxation of SEISS grants.
- New Restart Grants and Additional Restrictions Grants.
Income Tax, NICs, claims and reliefs
- Freeze on the personal allowance and higher rate threshold at 2021-22 levels up to and including 2025-2026
- NICs limits aligned
- Trading loss carryback: a new three year carry back for continuing business with £2,000,000 cap.
- Exemption from Income Tax for financial support payments to potential victims of modern slavery and human trafficking
- Pensions Lifetime Allowance: this is maintained at £1,073,100 up to and including 2025-26
- Venture Capital Schemes: Extension of the Social Investment Tax Relief (SITR) to April 2023
- Corporation Tax: from April 2023 the main rate will be 25%. The 19% rate continues for profits up to £50,000, tapering to the main rate of 25% for profits over £250,000.
- Loss carryback: extended to three years for continuing business with £2,000,000 cap.
- Enterprise Management Incentives scheme: call for evidence.
- R&D Relief: review & new condoc.
- Corporation Tax: exemption for the Northern Ireland Housing Executive.
- EU Interest and Royalties Directive: repeal.
- Research and Development PAYE Cap: updated design.
- Hybrid and other mismatches.
- Review of banking surcharge.
- Off-Payroll Working: Technical changes to the Off-Payroll Working rules legislation, including a new Targeted Anti Avoidance Rule (TAAR).
- Traineeships: extension for 16-24-year-olds in England.
- Statutory Sick Pay Rebate Scheme: extension 17 COVID-19: HMRC exemptions investment-led recovery.
- COVID-19: easement for employer-provided cycles exemption.
- Enterprise Management Incentives (EMI): Extension of time-limited exception to working time requirements.
- Optional Remuneration Arrangements: disregard for statutory parental bereavement payments.
- Income tax exemption for employer-reimbursed COVID-19 tests for 2020-21.
- Easement for employer-provided cycles exemption.
- Changes to treatment of termination payments and post-employment notice pay..
- COVID-19 home working: extended exemption will have effect until 5 April 2022.
- Increase the van benefit charge and the car and van fuel benefit charges.
- 130% Super Deduction for main rate assets.
- 50% First Year Allowance for special rate assets for two years.
- Annual Investment Allowance (AIA) extension.
- Restoring plant and machinery leases to pre-Covid-19 treatment.
- Qualifying decommissioning expenditure.
- Freeports: Enhanced Structures & Buildings Allowance.
Capital Gains Tax
- Maintain the Annual Exempt Amount at £12,300 up to and including 2025-26.
- Capital Gains Tax: Relief for gifts of business assets anti-avoidance for non-residents.
- Venture Capital Schemes: Extension of the Social Investment Tax Relief (SITR) to April 2023.
Maintain thresholds at 2020-21 levels up to and including 2025-26.
Land & Property taxes
- Stamp Duty Land Tax (SDLT)
- Maintain nil-rate band at £500k until 30 June 2021, £250k until 30 September 2021.
- Non-UK Resident SDLT Surcharge 2% from 1 April 2021.
- Relief for Freeports.
Annual Tax on Enveloped Dwellings (ATED)
- Update to annual chargeable amounts for 2021/2022 chargeable period.
- Annual Tax on Enveloped Dwellings (ATED) and 15 per cent rate of Stamp Duty Land Tax (SDLT): Relief for Housing Co-Operatives
- Three months 100% holiday, nine months 66% relief with cap.
- Changes to the tax-deductibility of business rate repayments.
- The registration threshold will be maintained at £85,000 up to and including 2023-24.
- The reduced rate for hospitality, accommodation and attractions will extend the 5% rate to 30 September 2021 then 12.5% to 31 March 2022.
- The window for starting deferred payments through the VAT New Payment Scheme is extended by up to three months.
- HMRC will have new powers to tackle Electronic Sales Suppression (ESS).
- Changes to the Tour Operators Margin Scheme.
- The reversal of the removal of NI Second Hand Margin Scheme for cars.
- A repeal of the VAT Treatment of Transactions Order 1992.
- The extension of MTD for Value Added Tax to all VAT registered businesses from 1 April 2022.
Tax penalties, compliance & administration
- Tax Conditionality: Licensing in England and Wales.
- Self-assessment: penalty easement.
- Interest harmonisation and tax penalty reform
- OECD Mandatory Disclosure Rules for Digital Platforms.
- HMRC: investment in compliance.
- HMRC: investment in digital infrastructure.
- HMRC: additional resource for debt pursuit, delayed from September 2020 to April 2021.
- Powers to amend interpretation and other provisions relating to banks.
- Amendments to HMRC Civil Information Powers.
- Amendment to Customs and Excise review and appeals legislation.
- A civil penalty for the unauthorised removal of goods that have been seized ‘in situ’.
- Tackling Promoters of Tax Avoidance: further measures.
- Follower Notices & Penalties: further measures.
Duties & levies
- Fuel Duty: one year freeze in 2021-22.
- Alcohol Duty: one year freeze in 2021-22.
- Tobacco Duty Rates: Consolidation of rates into Finance Bill 2021.
- Gaming Duty: rates set.
- Air Passenger Duty (APD) rates set for 2022 to 2023.
- Red Diesel: exemptions.
- Vehicle Excise Duty: freeze for HGVs in 2021-22.
- HGV Road User Levy: suspend for a further 12 months from August 2021 and freeze rates.
- Carbon Price Support (CPS) rate: maintained in 2022-23.
- Northern Ireland Steel Import Duty.
- Aggregates Levy: one year freeze in 2021-22.
- Landfill Tax: rates set for 2021 to 2022.
- Landfill Communities Fund-2021 to 2022.
- Plastic Packaging Tax.
- Repeal of Carbon Emissions Tax legislation.
- Universal Credit: maintain £20 increase to the standard allowance for six months.
- £500 payment to eligible Working Tax Credit recipients.
- Universal Credit: three-month delay to Minimum Income Floor reintroduction.
- Universal Credit: maintain surplus earnings de minimis at £2,500 in 2021-22.
- Shared Accommodation Rate (SAR): accelerate introduction of exemptions.
- Help to Grow: management up to 90% grants.
- Help to Grow: digital strengthening the public finances.
- UK Emissions Trading Scheme.
- DWP: investment in compliance with Financial Transactions.
- Public sector net borrowing impact of changes to financial transactions and guarantees. Previously announced policy decisions Financial transactions.
- UK-EU Future Relationship Agreement on Social Security Coordination: benefit rules.
- Local government: exceptional financial support for Local Authorities through a capitalisation direction.
- Withdrawal of LIBOR.
If your business or individual tax circumstances have been impacted and you would like us to consider your situation, please contact our office and provide a summary of your situation. We will reach out to you as soon as we can.