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After an unprecedented year in which the UK economy experienced its worst turbulences, Chancellor Rishi Sunak sets out a £407 billion recovery pathway following the Budget 2021. In this blog post, we highlight key information that you should take into consideration – for individuals, families and businesses.

1. Freeze on Income Tax and Reliefs

After a planned rise next year, personal allowances, basic and higher-rate thresholds will freeze until the financial year 2025-26. Here is a quick breakdown of increases that were announced for 2021-22:

• Personal allowance: £12,570.
• Basic rate threshold: £37,700.
• Higher rate threshold: £50,270.

2. Extended Job Protection Measures

The government has also outlined schemes to bolster businesses, employees and the self-employed during the crisis period, which are listed below:

• Employees: The previously announced Coronavirus Job Retention Scheme, which has supported many workers with wages amidst the pandemic, has been extended to 30 September 2021. In July, employers will be instructed to progressively contribute to their staff’s wages – covering the hours they do not work.

On that note, National Minimum Wage (NMW) has also been increased to £8.91 from April 2021.

• Self-employed: The same good news applies for this group. Under the Self-Employment Income Support Scheme (SEISS), you will be paid out fourth and fifth grants.
  
  • The fourth SEISS grant will be paid based on 80% of three months average of your trading profits - capped at £7,500 in total.
  • Meanwhile, the fifth SEISS grant will be made available over the summer covering May to September.
  • Your grant value will be determined based on a turnover test in the year April 2020 to April 2021.
  • Traders whose turnover has decreased by 30% or more will receive the full grant worth 80% of three months’ average trading profits, capped at £7,500 in total.
  • Traders whose turnover has decreased by less than 30% will receive a 30% grant, capped at £2,850.

• Businesses: The rate of corporation tax will rise to 25% in 2023, but protections for smaller businesses are ensured. For new business owners, you can expect up to £6k of grants if you’re under the retail and non-essential umbrella. Also, look out for a 130% reduction for expenditure on innovation.

3. Other Important Tidbits

• Lifetime Allowance for pension contributions remain at £1,073,100 until 2025-26.
• VAT registration threshold remains at £85,000, up to and including 2023-24.
• A new recovery loan scheme is introduced at £25k-£10m.

If you would like to enquire on more information – Right Accounts is here to help you with your needs.

You can contact us here.