Budget 2021

The Chancellor of the Exchequer, Rishi Sunak, announced his budget to a sparsely populated Parliament yesterday.  Without the usual braying mob the Chancellor was allowed a once in a lifetime opportunity to deliver a budget without interruption at a time when this could not have been more welcomed.

This was a budget focusing on “protecting jobs and livelihoods”. There was a welcome extension to the furlough scheme; widening eligibility to grants for the self-employed, although still not going far enough for some commentators; and a continuation of the universal credit uplift, albeit only temporary.

The main focus of this budget concerned company taxes, and we encourage you to read our budget guide which outlines these changes. For company owners this offers potentially exciting investment opportunities in the next two years, but a threat of claw back through increased corporation tax rates in April 2023.

As promised in the Conservative Party manifesto, there will be no rise in the rates of Income Tax, VAT or National Insurance. Despite much speculation, there were also no changes to Capital Gains Tax or Inheritance Tax rates.

As we predicted, fiscal drag will play a part in helping to repay the debt; thanks to low inflation this means a very small increase to basic and higher rate tax thresholds next month, but both will then be frozen until April 2026.

Likewise, the inheritance tax nil rate band, the annual capital gains tax exemption, ISA allowance and the pension lifetime allowance will all be frozen until at least April 2026. There was no mention of the pension annual allowance but surely this was an oversight and do not expect any generosity here.

The government will offer a green retail savings product through NS&I in the summer of 2021. This product will be closely linked to the UK’s sovereign green bond framework and will give all UK savers the opportunity to take part in the collective effort to tackle climate change, benefiting from the innovative reporting standards planned for the green gilt programme.

Finally, a Conservative budget would not be a budget without support for the housing market; the Chancellor announced further temporary measures on stamp duty, and a new government guarantee scheme for first time buyers.

 Download your free comprehensive budget guide here. 

To discuss any changes that might impact on your own finances, please get in touch with one of our trusted Financial Advisers today on 0117 450 1300.