Spring Budget 2021 Our guide to the main changes to tax rates and allowances for individuals, companies and trustees. These changes apply across ...
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Spring
Budget 2021
Our guide to the main changes to tax rates and allowances
for individuals, companies and trustees. These changes apply
across the UK unless otherwise indicated.
Spring Budget 2021 1Spring
Budget
About us 2021
Sanlam UK is a leading provider of high- The Chancellor unveiled a three point
quality investment products and services. path to recovery providing support for
Through our national network of offices, jobs and businesses as we emerge from
we help individuals, couples and families the ongoing crisis, which has over the last
protect and grow their wealth over the year overwhelmed the nation’s health and
long term. finances. This path being:
We are part of Sanlam Limited, an • billions to support businesses and
international financial services group families through the pandemic
with a listing on the Johannesburg Stock • investment-led recovery as the
Exchange. Established in 1918, the group UK emerges from lockdown
provides a broad range of services to
more than 10 million clients globally, • future changes to strengthen
including insurance, financial planning, public finances
investments and wealth management. Our Budget Summary sets out the
main changes/freezes to tax rates and
allowances for individuals, companies and
trustees. It also identifies other notable
changes which may be of interest.
2 Sanlam WealthIncome tax • Trustees also benefit from an annual
• The tax-free personal allowance will rise exempt amount of £6,150, again frozen
in line with CPI to £12,570 for 2021/2022 until April 2026. This amount will be
and will then remain at this level through diluted where the settlor has created
to April 2026. more than one trust subject to a
minimum of £1,230 per trust.
• The higher rate tax threshold will rise
to £50,270 for 2021/2022 and will also
Inheritance Tax (IHT)
then apply to April 2026. No change
• The nil rate band and residence nil
will be made to the additional rate tax
rate bands will not change and remain
threshold.
£325,000 and £175,000 respectively.
• The starting rate for savings income, Like various other allowances these
dividend allowance and personal will now be fixed at these levels until
savings allowances will all remain as April 2026.
they are for 2021/2022.
Corporation tax
• The Scottish Government has set the
• The main corporation tax rate will
starter, basic, intermediate and higher
remain at 19% until April 2023 at which
rate bands at £12,571 - £14,667, £14,668 -
time it will rise to 25% for companies
£25,296, £25,297 - £43,662 and £43,663
with profits over £250,000.
- £150,000 respectively for 2021/22.
• Small profits under £50,000 will
Capital gains tax (CGT) continue to be taxed at 19% from April
• The annual exempt amount stays at 2023, while businesses with profits
£12,300 for 2021/2022 and will remain greater than £50,000 but less than
at this amount through to April 2026. £250,000 will receive some tapering
and pay less than the main rate of 25%.
.
Spring Budget 2021 3Coronavirus Job Retention Scheme (CJRS)
extended to September 2021 with employees
receiving 80% of their salary.
VAT • There will be a new penalty regime for
• In July 2020, the government announced late submission of VAT which will be
that UK VAT-registered businesses could points-based, and a financial penalty
defer payment of VAT due with VAT will only be issued when the relevant
returns from 20 March 2020 to the end threshold is reached, proportionate
of June 2020, until the end of March to the amount of tax owed and how
2021. Any business that took advantage late the tax due is. This will apply from
of this original VAT deferral scheme can periods starting on or after 1 April 2022.
now opt to use the VAT Deferral New
Payment Scheme to pay that deferred Pensions
VAT in up to eleven equal payments • The lifetime allowance usually increases
from March 2021, rather than one larger annually in line with inflation (CPI) but
payment due by 31 March 2021. The this link will be removed for the next
service opened on 23 February 2021 5 years and the lifetime allowance
and will close on 21 June 2021. will now remain at its current level of
£1,073,100 up to and including the tax
• The government will extend the
year 2025/2026.
temporary reduced rate of 5% VAT for
goods and services supplied by the • Last year on 6 April 2020, the two
tourism and hospitality sector until 30 tapered annual allowance thresholds
September 2021. A transitional rate of were raised by £90,000. This means
12.5% will then apply until 31 March 2022 that those whose “threshold income” is
when VAT will revert to the standard £200,000 or less will not be affected
20% rate. by the taper at all, while those whose
“adjusted income” is between £240,000
• The VAT registration threshold of
and £300,000 have a reduced annual
£85,000 and deregistration threshold of
allowance of between £40,000 and
£83,000 will be maintained for a further
£10,000. The tapered annual allowance
period of two years from 1 April 2022.
thresholds and calculations remain
unchanged.
4 Sanlam WealthPersonal allowance
increases to
£12,570
Higher rate tax threshold
rises to
£50,270
CGT annual exempt amount
remains in place at
£12,300
Main rate of corporation tax
will remain at
19%
until 2023
Spring Budget 2021 5• The annual allowance remains Stamp duty
unchanged at £40,000. • Stamp Duty Land Tax (SDLT) Nil
Rate Band (NRB) – Extension on the
• The Pensions Schemes Act 2021 will
temporary increase to £500,000
introduce collective money purchase
in England and Northern Ireland
pension schemes (also known as
to 30 June 2021. NRB will reduce
collective defined contribution
to £250,000 on 1July 2021 until 30
schemes), and the government will
September 2021. 1 October 2021 will
legislate so that these can operate as
see a return to £125,000 for the NRB.
registered pension schemes.
Coronavirus support
ISAs
• Coronavirus Job Retention Scheme
• The ISA annual subscription limits will
(CJRS) extended to September 2021
remain unchanged at £20,000 for adult
with employees receiving 80% of their
ISAs and £9,000 for Junior ISAs and Child
salary. Employers will be expected
Trust Funds, for the 2021/22 tax year.
to contribute 10% in July and 20% in
National Insurance (NI) August and September.
• The National Insurance contributions • Mortgage guarantee scheme provides
(NICs) Primary Threshold and Lower guarantee to lenders who offer
Profits Limit will rise in line with the mortgages with a deposit of 5% on
increase in CPI to £9,568. homes up to £600,000. To run from
• The Upper Earnings Limit and Upper April 2021 to December 2022 for new
Profits Limit will increase to £50,270, in mortgages.
line with the income tax HRT and this • One off payment of £500 to eligible
threshold will remain until April 2026. Working Tax Credit claimants
• There are plans, subject to approval, • Extension of £20 per week increase to
to make employer NICs relief available. Universal Credit for a further 6 months.
This would be for eligible employees in
all Freeport tax sites from April 2022
and be available until at least April 2026.
6 Sanlam Wealth• Further £700 million of funding for Consultations and other
Education catch up for lost learning
forthcoming legislation
during the pandemic.
• £3.8 million in ‘no interest’ loans for Besides announcements in the Budget
vulnerable customers who would and to promote transparency and allow
benefit from affordable short-term scrutiny, the government will publish
credit. a number of tax-related consultations
and calls for evidence on 23 March
• Additional £425 million of discretionary
2021. This will improve opportunities
business grant funding to be provided
to feed into consultations and policy
to local authorities in England.
discussions, which will in turn strengthen
• Statutory Sick Pay (SSP) – small and policymaking. The announcements
medium sized employers can continue will not be high profile measures,
reclaiming up to two weeks of eligible won’t require legislation in the next
SSP costs per employee. Finance Bill or have an impact on the
government’s finances.
We can also expect the Finance Bill
2021 on 11 March.
There will be a review of Research and
Developments tax reliefs to make sure that
the UK remains a competitive location for
cutting edge research
Spring Budget 2021 7£1.65 billion will be allocated for 2021-22
to continue the vaccine deployment programme
in England.
Miscellaneous challenges and to fund important
• Fuel duty is to be frozen for the infrastructure investment to help create
11th consecutive year. green jobs across the UK.
• Alcohol duties are to be frozen for • A biomass feedstocks program in the
the second consecutive year. UK, is to benefit from £4m investment
aimed at identifying ways to increase
• A new Help to Grow scheme to offer
the production of green energy crops
up to 130,000 companies across the
and forest products that can be used
UK a digital and management boost.
for energy.
• Eight new English Freeports will
• The £5.2 billion flood and coastal
be based in East Midlands Airport,
defence programme for England
Felixstowe & Harwich, Humber,
announced at 2020 Budget will
Liverpool City Region, Plymouth,
commence in April this year with
Solent, Thames and Teeside.
schemes aimed at better protecting
• Reforms to the immigration system over 3,700 homes in several cities due
with the aim of helping ambitious UK to commence in 2021-22.
businesses attract the brightest and
• Subject to a business case, £4.8
best international talent.
million will be provided to support the
• A £375 million UK-wide Future Fund development of a hydrogen hub in
Breakthrough aimed at investing in Holyhead which will pilot the creation of
highly innovative companies, particularly hydrogen from renewable energy and
those working in life sciences and its use as a zero-emission fuel in HGVs.
quantum computing, or clean tech, that
• £1.65 billion will be allocated for 2021-
are aiming to raise funding in excess of
22 to continue the vaccine deployment
£20 million.
programme in England with the aim for
• Plans for at least £15 billion of green gilt everyone aged over 50 or at risk to be
issuance in the coming fiscal year, to offered a first dose of the vaccine by
help finance critical projects to address 15 April and for everyone 18 and over to
climate change and other environmental have been offered a first dose by 31 July.
8 Sanlam Wealth• An additional £19 million towards Inevitably, the impact of some of these
tackling domestic abuse, including changes will gradually become clearer
£15 million in 2021-22 across England and further details will emerge as new
and Wales. information becomes available. In the
meantime if you have any questions
• Withdrawal of LIBOR. Following a
regarding any of the above, please
consultation in 2020, and as announced
email technical@sanlam.co.uk
on 12 November 2020, the government
will legislate in Finance Bill 2021 to deal
with the withdrawal of LIBOR and the
reform of other benchmark rates.
• Lord Hill’s review on UK listings – The March 2021
government welcomes the publication
Prepared by Sanlam’s Technical Team
of this review on how to encourage
innovative businesses to publicly list Sanlam Investments and Pensions
and promote high growth in the UK. One Temple Quay
The government has also acknowledged 1 Temple Back East
the Financial Conduct Authority’s Bristol
commitment to bring forward BS1 6DZ
consultations and looks forward to
sanlam.co.uk
working together on changes to their
rules on the issues raised.
Spring Budget 2021 9Contact us Sanlam’s technical support team is only an email away. E technical@sanlam.co.uk With extensive expertise across a broad range of specialist financial areas, we provide a prompt and reliable service to financial advisers throughout the UK. 10 Sanlam Wealth
This note is for use by financial advisers only. It is not intended for onward transmission to a private customer and should not be relied upon by any other
person. Sanlam Investments and Pensions accepts no liability for any action taken or not taken by any individual or firm as a result of the contents of this
material. While we have made every effort to ensure the accuracy of this material we cannot accept responsibility for any consequences
(financial or otherwise) arising from relying on it.
Sanlam and Sanlam Investments and Pensions are trading names of Sanlam Life & Pensions UK Limited (SLP (Registered in England and Wales 980142))
and Sanlam Financial Services UK Limited (SFS (Registered in England and Wales 2354894)). SLP is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation Authority. SFS is authorised and regulated by the Financial Conduct Authority.
Registered Office: Monument Place, 24 Monument Street, London, EC3R 8AJ
enq@sanlam.co.uk
1427/03.21 sanlam.co.uk
Spring Budget 2021 11Sanlam’s technical support team is only an email away. With extensive
expertise across a broad range of specialist financial areas, we provide a
prompt and reliable service to financial advisers throughout the UK.
sanlam.co.uk SanlamUK
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