5th March 2021

The Budget 2021-2022: At a glance

Blackadders to merge with Plenderleath Runcie

2020 was a year synonymous with the words ‘unprecedented’, ‘challenging’ and the ‘new normal’ – something which has had a no doubt profound impact on not only the way we live our lives, but the wider economy and political sphere.

As a result, COVID-19 has stood centre stage in all government decisions and forecasting over the past year, but a prevalent question has been how the UK government plans to account for and recover from the destruction the pandemic has left in its wake.

The Budget and its impact on Personal Tax

Playing a balancing act between addressing the mounting UK deficit and supporting those most affected by the pandemic has undoubtedly been a main consideration in this year’s Budget, released on the 3rd March 2021 by Chancellor of the Exchequer, Rishi Sunak.

In spite of the more sizeable tax reforms reported in the media on the lead up to the Budget, the field of personal tax has seen very little in the way of change.

Personal income tax thresholds will be frozen from next year until 2026 - at £12,570 for the basic rate and at £50,270 for the higher rate – whilst other eagerly anticipated areas such as Inheritance Tax, Capital Gains Tax and the Pension Lifetime Allowance saw no change at all.

The impact of this year’s Budget for Private Client practitioners could therefore be seen as surprisingly small, however there are other areas of interest for both individuals and businesses alike.

Property

Change has been announced south of the border in regards to the extension of the Stamp Duty holiday on properties worth up to £500,000 – this has been extended to the end of June in the UK Budget, and subsequently no Stamp Duty on homes worth up to £250,000 for the following three months leading up to October 2021.

The Scottish government, however, has not announced the same for their devolved powers over Land and Buildings Transaction Tax (LBTT), meaning that the relief would not be extended beyond March in Scotland and Scottish property buyers could be left at a disadvantage.

The Chancellor also revealed Lloyds, Santander, Barclays and HSBC would be offering the government-backed mortgages for those with 5% deposits from April.

Sunak said: “Even with a stamp duty cut there is still a significant barrier to people getting on the housing ladder” - noting that this could provide a chance for those who can’t afford a big deposit to buy their own home.

Employment

Another topical area of interest amidst the pandemic is that of the government’s furlough scheme to help slow the rate of potential redundancies and unemployment.

To this effect, it was announced that the furlough scheme would be extended to September 2021, alongside promised reforms and continuation of the self-employment income support scheme (SEISS) which has faced criticism for excluding a large portion of the population from receiving this support due to the qualification criteria.

Business

An area of taxation which has seen some reform is that of Corporation Tax, which will be increased to 25% in 2023, a time ‘well after’ which the Office for Budget Responsibility expects the economy to have recovered from the pandemic.

Proportionately, because corporation tax is only charged on profits, the government does not expect struggling businesses to be affected – aided by the government’s new Small Profits Rates for small businesses with profits of £50,000 or less, being maintained at the current tax rate of 19%.

Alongside this, in a bid to aid the struggling hospitality and tourism sectors, a reduced rate of 5% VAT has been extended to the end of September 2021, and will only go up to 12.5% after that, before returning to 20% in April 2022.

Summary

Whilst the changes implemented by this years Budget were not as radical as anticipated, especially in the specific field of Private Client and personal tax, the changes brought forward in regards to property, employment and business are certainly a very corona-centric approach.

Undoubtedly the repercussions for both individuals and businesses alike, leading on from the reforms, will be an interesting series to follow as we emerge from the pandemic and the resultant economic changes which follow.

 

 

The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.

Blackadders takes all reasonable steps to ensure that the content of this site is accurate and up to date. The site is not, however, intended as a substitute for seeking legal or other professional advice but rather as an informative guide to the services provided by Blackadders and topical legal developments. Site visitors should always seek advice tailored to their specific situation. Consequently, Blackadders accepts no responsibility for any loss or damage suffered by anyone acting or failing to act on the basis of information contained on this site. Downloading of material contained on this site is at the user’s own risk and all necessary virus checks must first be carried out by the user. Blackadders is not responsible for the material found on any web sites linked to this one and links to this site may only be made with Blackadders prior consent.

Copyright

Blackadders owns the copyright in this blog and all material contained on it. The material on this site may be downloaded for personal use only and must not be altered. Otherwise, Blackadders’ written consent is required before any material on this site is reproduced, copied or transmitted in any way.

Privacy Statement

Information passed to us via this site is kept confidential and will not be disclosed to third parties except if authorised by you or required by law.

© Blackadders LLP 2021

Members of the Law Society of Scotland.

Blackadders Solicitors is a trading name of Blackadders LLP, a limited liability partnership, registered in Scotland No SO301600 whose registered office is 30 & 34 Reform Street, Dundee, DD1 1RJ. Reference to a ‘partner’ is to a member of Blackadders LLP.

Back to News & Legal Updates