Legal News | 4.03.21
What does the budget mean for you?
As Britain starts to recover from the coronavirus pandemic, Chancellor of the Exchequer Rishi Sunak delivered his plans for taxation and spending.
Depressing figures include a total sum of 700,000 people who have lost their jobs since March 2020 and lack of spending has meant that the economy has shrunk by 10%; however, not all of Mr Sunak’s speech was doom and gloom.
As you may have seen in our most recent article (https://wansbroughs.com/news-events/gift-now-or-forever-hold-your-peace/) the Office of Tax Simplification had recommended to the government a realignment of the rates of Capital Gains Tax (CGT) to bring them in line with those of Income Tax. However, no CGT hike was announced and the only restriction was the freezing of annual exemptions (£12,300 or £6,150 for trusts) until 2026.
If you have been considering making some larger gifts or asset disposals, now may be an opportunity to take advantage if you think it is a case of when, not if, CGT rates go up.
In addition, the inheritance tax threshold continues to be frozen at least until 2026, meaning that inheritance tax is charged on estates exceeding £325,000 (subject to exemptions and reliefs). As this figure of £325,000 has been in place since 2009, an increasing number of estates will be caught by IHT; speak with your usual contact at Wansbroughs if you want more advice on this.
The government has confirmed that they will not raise the rates of income tax or national insurance but instead personal tax thresholds will be frozen at the current level this year. The basic allowance threshold will therefore stand at £12,570 until 2026 (the higher rate threshold increasing to £50,270). If you are in the fortunate position of having excess income and you want to consider tax efficient gifting then please get in touch for more advice.
Businesses with profits of more than £50,000 are set to foot a large part of the burden with corporation tax rising to 25% by the end of 2023. For now, the rate remains at 19%.
In addition, the SDLT break for properties up to £500,000 has been extended by another three months, with a £250,000 limit to continue until the end of September; thereafter the threshold will revert to £125,000.
There is still time therefore to think about planning with your second home, or maybe moving house.
Whilst the majority of the pre-Budget speculation has not come into effect, if any of the changes in the 2021 Budget affect you or if you would like any advice on tax planning, please do get in touch with your usual Wansbroughs contact or email email@example.com.