Initial summary of the main budget announcements affecting individuals
In what has to be one of the most eagerly anticipated Budgets in decades, Rishi Sunak continued with his promise to “do whatever it takes” to tackle the ongoing pandemic and outlined his three point plan to protect jobs and strengthen public finances, writes Matt Herd, Personal Tax Director, Ensors Chartered Accountants. That included pledges to:-
- Support businesses and families through the pandemic
- Spur an investment-led recovery as the UK emerges from lockdown
- Make future changes to strengthen public finances
As had been heavily anticipated, the Chancellor announced an extension to the Coronavirus Job Retention Scheme (CJRS) and Self Employment Income Support Scheme (SEISS), both of which will now run until the end of September 2021. It was also confirmed that the SEISS is to be widened such that qualifying new businesses which commenced after 5 April 2019 will now be able to apply for the 4th and 5th SEISS grants.
Although many of the Chancellor’s announcements were aimed at supporting businesses, measures designed to assist individuals were also confirmed including:-
- National Living Wage increased to £8.91 from April 2021
- Six-month extension of the £20 per week Universal Credit uplift, with eligible Working Tax Credit claimants receiving a one-off payment of £500.
- Freeze on all alcohol duties
- Fuel duty to be frozen for eleventh consecutive year
Additional measures were announced to support the housing sector, including Stamp Duty.
With many calling for an extension to the Stamp Duty holiday on residential property, the Chancellor confirmed that the current £500,000 nil rate band would be extended until the end of June 2021, being replaced with a £250,000 nil rate band on 1 July 2021 before returning to the previous £125,000 from 1 October 2021.
The Chancellor confirmed details of the Government backed new mortgage guarantee scheme aimed at helping first-time buyers and home movers with a minimum five per cent deposit.
As expected, the Chancellor also announced measures aimed at starting the process of repaying the unprecedented government borrowings and repairing the damage done to the economy by the pandemic.
The Chancellor stuck to the manifesto promise not to increase Income Tax, National Insurance or VAT. However, he did announce that the 2021/22 Personal Allowance of £12,570 and higher rate tax threshold of £50,270 would be kept at these levels until April 2026. Although this will not see an increase in an individual’s overall tax liability, it is a sustained move away from the previous practice of increasing the annual thresholds.
Inheritance Tax (IHT) and Capital Gains Tax (CGT)
Similarly, the Chancellor announced that there will be no changes to IHT or CGT allowances. The CGT annual exemption will remain at its current rate of £12,300 until April 2026. The IHT Nil Rate Band and Residence Nil Rate Band which had been expected to increase in line with CPI in April 2021 will remain at £325,000 and £175,000 respectively until April 2026.
Although not included in his budget speech, it has also been confirmed that the temporary Income Tax and National Insurance Contribution exemptions which apply to individuals who are working from home due to the coronavirus outbreak will be extended by 12 months 5 April 2022.