Budget for Recovery………

At least that was the introduction by Boris Johnson. Kier Starmer suggested it is a ‘budget that papers over the cracks and not rebuilding the foundations’.

Whichever view we take, this budget was always going to be a very difficult balance between promoting growth in ‘UK plc’ in a post-Brexit world yet make meaningful steps towards repaying the pandemic related debt.

We will need time to look at the detail and expect that will follow over the next few days when eventually published.

The key financial planning aspects can be summarised as:

• Personal Tax Allowances

The Personal Allowance will increase from £12,500 to £12,570 and the higher rate tax threshold will increase from £50,000 to £50,270 on 6 April 2021. However, these will both be frozen until March 2026. No changes to dividend allowances or rates.

• Capital Gains Tax

No announcements made. There is speculation that changes may be unveiled in the Autumn.

• Stamp Duty

The home stamp duty holiday will continue until the end of June. The nil rate band will then remain at £250,000, double the standard level, until September, only returning to £125,000 on 1 October.

• Mortgage Guarantee Scheme

Launch of a government-backed guarantee to help banks to lend with just a 5% deposit.

• Pension Lifetime Allowance

Frozen at the 2020/21 allowance of £1,073,100 for the rest of this parliament term.

• Individual Savings Accounts (ISA)

The £20,000 allowance will continue for 2021/22 with Junior ISAs also held at £9,000.

• Furlough Schemes

The scheme will continue until September 2021 at the current rate of 80%, based upon hours that are not worked. No contribution is required by employers until July 2021. It will then be 10% paid by the employer in July, rising to 20% in August and September.

• Self-Employed Income Support Scheme (SEISS)

Extended to September 2021. A fourth SEISS grant will run for three months from February until April 2021 worth 80 per cent of three months’ average trading profits up to £7,500 in total.

A fifth and final grant will be available from May onwards, worth three months of average profits.

• Business Grants

Up to £6,000 for ‘business restarts.

• Business – Corporation Tax

Main corporation tax to rise from 19% to 25% in 2023. 19% will apply to companies with profits below £50,000 with a taper applying on companies with profits up to £250,000.

• Universal Credit

The Universal Credit uplift (£20 per week) will continue for the next six months.

We will consider these changes as part of our regular client review meetings. However, as always, please contact us if you would like to discuss your situation in the meantime.

PS No increases to fuel or alcohol duties!