March 4, 2021

Spring Budget – key points

by Francis Jarman

in Financial Planning Insights

As with most Budgets the devil is sometimes in the detail so over the coming days expect a deeper-dive into the numbers.

But for now we would like to summarise the 7 main points which may impact Financial Planning for our clients:

1. The Income Tax Bands for Personal Allowance and the Higher Rate Threshold will be ‘Frozen’ from April until 2026 at £12,570 and £50,270 respectively.
2. Corporation Tax rules have changed. For companies with annual profits of over £250,000, their Corporation Tax Rate will increase to 25% by 2023. Those with annual profits of between £50,000 and £250,000 will benefit from marginal relief and for the smaller companies with less than £50,000 in annual profits, they will maintain their Corporation Tax Rate of 19%.
3. The Chancellor announced a ‘Freeze’ on Inheritance Tax Bands (£325,000 Nil Rate Band and £175,000 Residential Nil Rate Band), Lifetime Allowance (£1,073,100) and Capital Gains Tax (£12,300) until 2026.
4. Stamp Duty Holiday is being extended. The nil rate band for Stamp Duty will remain at £500,000 until 30th June (it was supposed to finish at the end of March). At this point, the nil rate band will drop to £250,000 until September and will drop to the normal level of £125,000 on 1st October.
5. A ‘Green Bond’ was announced which is a new investment being offered by National Savings and Investments (NS&I) to give savers the chance to invest in ‘Green’ projects while earning interest on their savings.
6. The Furlough Scheme is being extended until September. The Government will contribute 70% of staff wages from July and employers will have to pay 10%. For August and September, the government contribution will drop to 60% and employers will need to top this up by 20% to ensure the employees receive no less than 80% of their salary during the period they are not able to work. The government also announced two further Grants for the Self Employed which will be running until September this year.
7. The Chancellor announced possible new rules to encourage workplace pension schemes to invest in illiquid assets. The view is to give workplace pension schemes more flexibility to invest in this way and the government will be carrying out a review into the charge cap.