To the casual observer, the first Budget of 2021 appeared to have been fully revealed before the Chancellor even reached the despatch box. The relentless flow of pre-Budget rumours, kite-flying and red herrings makes it is all the more important to forget what was said before 12.30 on 3 March and concentrate on what Rishi Sunak did deliver in his speech.
The real – as opposed to rumoured – announcements included:
- The main rate of corporation tax will be increased to 25% from April 2023 for companies with profits of at least £250,000. At the same time, a small profits rate of 19% will be introduced for companies with profits below £50,000.
- For two years from April 2021, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance.
- The coronavirus job retention scheme (CJRS) will be extended in full until the end of June 2021 and then phased out over the following three months.
- The self-employed income support scheme will also be extended at its current level with a fourth grant covering the period February to April. A fifth grant will cover following three months, but this will be at a lower level for those who have seen less than a 30% drop in turnover. Eligibility for the SEISS will be extended to include those who became self-employed in 2019/20.
- The personal allowance and higher rate threshold will rise to £12,570 and £50,270 for 2021/22 and will then be frozen for the next four years.
- The capital gains tax annual exemption, the inheritance tax rate nil rate band and the lifetime allowance will all be frozen at their current levels until April 2026.
- The business rates holiday for retail, hospitality and leisure businesses will be extended for three months and then reduced to a 66% relief until the end of March 2022.
- The temporary 5% VAT rate for hospitality, hotel and holiday accommodation and admission to certain attractions will be extended to the end of September 2021 and then replaced by a 12.5% rate until 31 March 2022.
- The exemption from stamp duty land tax on the first £500,000 of residential property value will be extended to 30 June and then replaced by a £250,000 exemption until 30 September 2021.
- A new residential mortgage guarantee scheme will run from April 2021 to December 2022, aimed at increasing availability of 91%-95% loan-to-value mortgages. The maximum property value will be £600,000 and mortgages must be arranged on a repayment basis.
- Fuel duty was frozen again this year, alongside alcohol duties which are frozen for the second year running.