3 March 2021 - Rishi Sunak, Chancellor of the Exchequer, gave his annual Budget today.And with a national debt in excess of £400 billion, all eyes were focused on how this debt will be paid-off.
It turns out that, for now at least, that task falls on businesses, not individuals.
Commenting on the announcements, Darius McDermott, managing director of Chelsea Financial Services, said:
“The UK is now in debt to the tune of £407 billion and, like it or not, something had to give. For now, it’s corporates rather than individuals that are being asked not to foot the bill, but to stop that bill getting any larger. Rishi Sunak is giving companies time to recover and a short term boost with the ‘super deduction’ but is asking them to repay some of that support in the form of higher taxes in the next few years.
“For individuals, Personal Allowances have been frozen, which many will call a stealth tax – as time goes on, we will all pay little more. But given some allowances have almost doubled in the past decade, I think we have been spared far worse.
“The pandemic bill still needs to be paid and I think we will see further measures in future, once the economy and individuals have recovered.
“From an investment perspective, the rumoured one-off ‘wealth grab’ did not happen and, with record low interest rates, I think today’s measures still encourage saving and investing. Indeed, it will be the investors that help him achieve his aspirations for green infrastructure and smaller company growth.”
The inheritance tax nil-rate bands will remain at existing levels until April 2026. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.
The income tax Personal Allowance will rise with CPI as planned to £12,570 from April 2021 and will remain at this level until April 2026. The income tax HRT will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026.
The value of gains that a taxpayer can realise before paying Capital Gains Tax, the Annual Exempt Amount, will be maintained at the present level until April 2026. It will remain at £12,300 for individuals, personal representatives and some types of trusts and £6,150 for most trusts.
The government will maintain the Pensions Lifetime Allowance at its current level of £1,073,100 until April 2026.
The band of savings income that is subject to the 0% starting tax rate will remain at its current level of £5,000 for 2021-22.
The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.
The annual subscription limit for Junior ISAs and Child Trust Funds for 2021-22 will remain unchanged at £9,000.