We can’t quite believe we’re talking about another tax year already, but Rishi Sunak has delivered his Spring Budget Update.
There wasn’t quite as many updates as we would have ordinarily expected, but we’ve done our best to summarise the main points for you below.
There will be an increase to the tax-free personal allowance to £12,570 for the 21/22 tax year. There will also be an increase to the point at which you begin paying higher rate tax; this will move to £50,270. The additional rate band will remain frozen at £150,000.
These thresholds will remain in place until the end of the 2025/26 tax year.
There will be an increase the threshold for class 1 contributions for employees and class 4 NICs for self-employed people to £9,568 in the 21/22 tax year.
Class 2 NICs for the self-employed will remain at £3.05 per week for 21/22 and the upper earnings limit and upper profits limit will increase to £50,270.
The capital gains tax annual exempt amount will remain in place at £12,300 until 25/26.
There will be no changes to the lifetime limit of £1m for qualifying gains for Business Asset Disposal Relief. The 10% tax rate on these qualifying gains remains the same.
Company van benefits for private use on a van will rise to £3,500. The company van fuel benefit charge will increase from to £669. The company car fuel benefit will rise to £24,600 (upon which the BIK % will be applied). All of these change will take place from 6 April 21.
Any losses arising from sole trade or partnership businesses may be carried back for 3 years (as opposed to the usual 1 year limit) for the 20/21 and 21/22 tax years.
Corporation Tax rates will increase from 1 April 2023. For companies where profits are less than £50,000, the rate will remain at 19%. Where profits range from £50,001 and £250,000, companies will pay the main rate (25%), however this will be reduced by a marginal relief which essentially creates a tapered Corporation Tax rate.
Corporation Tax losses, which occur in accounting periods ending in the period 1 April 2020 to 31 March 2022, can be carried back for 3 years (rather than the usual 1 year).
There will be a ‘super deduction’ for qualifying purchases of plant and machinery between 1 April 2021 and 31 March 2023. 130% first year allowances will apply to these main rate asset purchases. A 50% first year capital allowance will be available or qualifying special-rates assets.
The annual investment allowance will reduce to £200,000 from 1 January 2022. The rate of £1m will apply until then.
We hope the above gives you an idea of the changes that have taken place. If you have any queries, please let us know and our team will be happy to help. Send us a message through our contact page or email us firstname.lastname@example.org