Chancellor Rishi Sunak delivered his spring budget today and with a raft of giveaways, and extensions to the emergency measures put in place for the pandemic, it certainly is another costly one for the Treasury. Of more concern to most was how he planned to fund this continued spend and the interesting conclusion was, well, by not doing anything really.

What he did do was freeze numerous tax thresholds and raised Corporation Tax to 25% from April 2023 for larger companies but apart from this minor tinkering, there was little other change that will impact most of your personal situations.

The main tax points were as follows:

Income Tax

The income tax rates remain unchanged.

The Personal Allowance will rise in line with CPI as planned to £12,570 from April 2021 and will be then frozen until April 2026.

The basic rate band will increase from April 2021 by £200 to £37,700. This means that an individual with their full personal allowance available will begin to pay higher rate tax on income above £50,270 (£37,700 + £12,570).

The higher rate threshold will be uprated in line with CPI as planned in April 2021 but then is frozen until April 2026.

The starting rate for savings tax band will remain frozen at its current level of £5,000 for 2021 to 2022.

Capital Gains Tax

The annual exempt amount on Capital Gains remains unchanged at £12,300 for individuals, personal representatives and some types of trusts, and £6,150 for most trusts. This will remain frozen until April 2026.

Inheritance Tax

The Inheritance tax bands will be frozen 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.

Corporation Tax

The rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for profits under £50,000 will be 19% with relief for businesses with profits under £250,000 so that they pay less than the main rate of 25%.

Stamp Duty Land Tax

The Temporary Stamp Duty Land Tax (SDLT) has been extended and the temporary increase in the residential Stamp Duty Land Tax Nil Rate Band to £500,000 will continue to apply in England and Northern Ireland until 30 June 2021.

From 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.

Pension Standard Lifetime Allowance (SLA)

The SLA for 2020/21 will not be increased between 2021/22 and 2025/26 (inclusive). Instead, it will remain at £1,073,100 throughout this period.

Before the change, the SLA for each tax year from 2021/22 to 2025/26 (inclusive) would have increased in line with any annual increase in the consumer prices index (CPI) to the September before the tax year started. Without the change, the SLA for 2021/22 would have been £1,078,900.

So, in summary, there are a few minor changes here which need to be considered but nothing ground-breaking.

If you have any further questions on how it impacts your individual situation, please get in touch.

Adam