2021 Budget

Post Author:

Anne Melville

Date Posted:

March 5, 2021

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Categories:

Capital gains tax , Government Announcements , Inheritance tax , Pensions, Savings & Investments

This is the second in our series of seven blogs regarding the 2021 Budget delivered by the Chancellor, Rishi Sunak on 3 March 2021 and covers:-

  1. Capital Gains
  2. Inheritance Tax
  3. Pensions
  4. ISAs
  5. 95% Mortgage Guarantee
  6. Wealth Tax 
  1. Capital Gains 

Capital Gains Tax Annual Exempt Amount   

  • The current Capital Gains Tax Annual Exempt Amount for individuals, personal representatives and some types of trusts of £12,300 will be maintained at this level until April 2026
  • The current Capital Gains Tax Annual Exempt Amount for most types of trusts of £6,150 will be maintained at this level until April 2026 

Capital Gains Tax Rates

There was no mention of Capital Gains Tax Rates.  We understand that the UK Government is still considering the reform of Capital Gains Tax suggested by the Office of Tax Simplification in its report of 11 November 2020.

We may find out more on 23 March 2020 when the Treasury is due to publish a number of consultation papers on longer term tax policy. 

  1. Inheritance tax

Nil-rate band and residence nil-rate band

The inheritance tax nil-rate bands will also 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 therefore continue to pass on up to £500,000 without an inheritance tax liability
  • The qualifying estate of a surviving spouse or civil partner therefore can continue to pass on up to £1 million without an inheritance tax liability
  1. Pensions

Annual Allowance

The pensions annual allowance (the maximum that you can contribute per year) remains as £40,000

Lifetime Allowance

The Pensions Lifetime Allowance will be kept at its current level of £1,073,100 until April 2026.

There are once again concerns that senior doctors in the NHS pension scheme, who will be adversely affected by this change, will work fewer hours or even retire early to avoid being hit by charges for exceeding the Lifetime Allowance.  This could potentially have a detrimental effect on the health service.

  1. ISAs

 Individual Savings Account (ISA) annual subscription limit

The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.

Junior ISA and Child Trust Fund annual subscription limit

The annual subscription limit for Junior ISAs and Child Trust Funds for 2021-22 will remain unchanged at £9,000. 

5.       95% mortgage guarantee

Individuals in all parts of the UK will be able to benefit from the UK Government’s new mortgage guarantee scheme.

This will enable first-time buyers and existing homeowners the chance to secure a mortgage on homes costing up to £600,000 with just a 5% deposit. 

  1. Wealth Tax 

There had been speculation about the announcement of a Wealth Tax  to assist the UK to recover from the Coronavirus pandemic and the resulting  increase in public borrowing. There was no mention of this in the Budget.

Again, we may find out whether this option is still “on the table” on 23 March 2021 when the Treasury is due to publish a number of consultation papers on longer term tax policy.

Links to other 6 Budget Blogs

https://jsca.co.uk/budget-2021/

Income Tax and National Insurance

https://jsca.co.uk/budget-2021-3/

Corporation Tax, Super-deduction and Special Rate Allowance, Extended Loss Carry Back for Businesses, New Recovery Loan Scheme, Preventing abuse of Research and Development (R&D) and Reform of Self-Assessment Penalties and Interest

https://jsca.co.uk/budget-2021-4/

VAT and Duties

https://jsca.co.uk/budget-2021-5/

SDLT and LBTT, Licensing in Scotland, Freeports, Levelling Up Fund Prospectus Launch, Green Initiatives, Investment in HMRC and Funding for Scotland

https://jsca.co.uk/budget-2021-6/

Self Employed Income Support Scheme (SEISS)

https://jsca.co.uk/budget-2021-7/

Coronavirus Job Retention Scheme (CJRS)

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Michael Longmire on Unsplash

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