We’ve listed below some of the main points from this week’s Budget in relation to financial planning, which we hope you find useful: It’s a budget of two halves with these announcements and a range of tax consultations also expected to be published on 23 March 2021.
There are no changes to the income tax rates. The personal allowance will rise in line with the September CPI figure to £12,570 for 2021/22. The higher rate threshold for English, Welsh and Northern Irish taxpayers will increase to £50,270. These will tehn be frozen at this level until 5t April 2026.
There are no changes to the previously announced National Insurance rates for tax year 2021/22. The National Insurance contributions Upper Earnings Limit and Upper Profits Limit will remain in line with the higher-rate threshold of £50,270.
Capital gains tax (CGT)
There are no changes to CGT rates. The individual CGT annual exemption remains frozen at £12,300 until 5 April 2026.
The ISA threshold remains at £20,000 for 2021/22 and the Junior ISA limit continues to be £9,000 for.
The basic nil rate band will remain frozen at £325,000 until 5 April 2026 and the residence nil-rate band will also be fixed at £175,000 until 5 April 2026.
The Corporation Tax rate will increase to 25% for the financial year beginning on or after 1 April 2023 for businesses with profits of £250,000 or above. Companies with profits of £50,000 or less will be able to continue to benefit from the 19% rate corporation tax.
Subject to certain thresholds, unincorporated and incorporated companies will also be able to carry back trading losses for three years rather than just one year in 2020/21 and 2021/22.
Green National Savings & Investment (NS&I) product
This new NS&I product will be offered from summer 2021 to allow savers to take part in efforts to reduce climate change.
The contactless payment card limit will increase to £100 later in the year.
Mortgage Guarantee Scheme
From April 2021, borrowers will be able to secure a mortgage up to £600,000 with a 5% deposit. This will apply to new mortgages up to 31 December 2022. There will be the option to fix the mortgage for at least five years.
Pension Lifetime allowance
The lifetime allowance – the maximum amount of benefits an individual can take from their pension savings before incurring a tax charge – remains fixed at £1,073,100 until 5 April 2026.
State Pension underpayments
The DWP have estimated a figure of £3 billion will be needed over the next six years to fix underpayments of the State Pension to women going back over several years. A DWP investigation last year highlighted the scale of the issue and a repayment programme has been running since January this year.
If you’d like to discuss how any of the above affects your own personal financial planning, please contact your usual consultant or firstname.lastname@example.org.