Adam’s Technical – The Budget – March 2021

Adam’s Technical – The Budget – March 2021

The latest Budget was delivered by Rishi Sunak.  The main finance related points are summarised below:

• The income tax-free personal allowance increased on the 6 April 2021 from £12,500 to £12,570 and the 20% basic rate band increased from £37,500 to £37,700. These increases were in-line with the Consumer Price Index.

This means income tax at the 40% rate will start at £50,270. The additional rate of 45% remains at £150,000.

The intention is that the above bands will not change until the 6 April 2026, at the earliest.

• The capital gains tax annual exempt amount remains at £12,300 (half this amount for trusts) until April 2026. The percentage tax rates on gains above this amount remain the same.

• The pension lifetime allowance will also remain fixed at its current amount of £1,073,100 until April 2026. The maximum gross annual contribution amount is unchanged at £40,000 for this tax year.

• The main equity/cash ISA allowance stays at £20,000. This is the fifth tax year at this level. The Junior ISA and Lifetime ISA allowances remain at £9,000 and £4,000 respectively.

• It is the same story as above with the inheritance tax nil rate band of £325,000 and the residence nil rate band of £175,000. They will remain at their current levels until April 2026.

• The current corporation tax rate of 19% is set to increase to 25% in April 2023.

If you have any queries, please contact your Morfitt & Turnbull adviser.