The spring Budget last week was always going to be an interesting one as the Chancellor Rishi Sunak had to strike a balance between continuing to support people, businesses and the overall economy, and also to begin looking at ways of bringing in some revenue to offset the large scale spending spree that has occurred during the last 12 months.
Is It Possible To Balance The Books?
Whether he achieved that balance is for the political commentators to mull over, what we would like to do here is give you a few of the key points that arose from the Budget in relation to tax and business.
Here are those key points as copied from a Which article by Ian Aikman:
Tax thresholds will be frozen from next year
Income tax and National Insurance thresholds, which determine how much of your income is taxed, will increase for the 2021-22 tax year in April but will be frozen after that until 2026. The tax personal allowance will rise from £12,500 to £12,570 next year. Then it will stay at that rate for five years. Similarly, the threshold at which you would pay the higher tax rate will rise from £50,000 to £50,270, where it will also be frozen.
Though this isn’t technically a tax rise, it does mean many will pay tax on more of their income than they would have if the thresholds had continued to rise over the next few years.
Furlough scheme extended
The furlough scheme, previously due to end on 30 April, will now continue until the end of September. Anyone on furlough during that time will continue to receive 80% of their salary from the government, capped at £2,500 a month. However, employers will have to contribute 10% from July and 20% in August and September towards the hours their staff are not working. Millions of people across the country are still benefiting from the furlough scheme, so many will breathe a sigh of relief at this announcement.
More help for the self-employed
The Chancellor announced details of the fourth and fifth payments for the self-employed income support scheme (SEISS). Self-employed workers have been kept in the dark about the fourth SEISS payment, which led MoneySavingExpert founder Martin Lewis to criticise the Treasury for withholding details until the Budget speech. The fourth payment, which covers February, March and April, will cover up to 80% of average monthly profits and is capped at £2,500. The fifth and final payment of the scheme will cover May to September, and its size will depend on how much turnover you have lost over the period.
Corporation tax will rise… eventually
To help balance out the government’s huge spending on coronavirus support, the Chancellor confirmed a much-rumoured corporation tax rise, bringing the rate from its historic low of 19% up to 25%. This would still mean the UK has the lowest corporation tax rate of the G7 nations. The rise will only come into effect from 2023, and the Chancellor says just 10% of companies will have to pay this higher rate. This is because businesses with profits under £50,000 will still pay 19%.
Read more: https://www.which.co.uk/news/2021/03/budget-2021-what-you-need-to-know/ – Which?
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