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A Moment of Challenge and of Change
When the Chancellor of the Exchequer, Rishi Sunak, stood up in March 2020 to deliver his first Budget, he little thought that the measures he announced at that time would still be required twelve months later. He made that clear as he stood to deliver his second Budget on 3rd March; highlighting the £407 billion of covid-support which will have been delivered by March next year.
That support includes the continuation of a number of existing measures including furlough payments and self-employed support; both of which are to be continued until September with phasing from July in line with business sector opening. The current business rates holiday, which applies to retail, leisure and hospitality businesses and is therefore vital for Devon’s economy, is also to continue until the end of June with rates for the remainder of the tax year being discounted by a third, subject to certain criteria. Hospitality and tourism businesses will also benefit from the continuation of the 5% VAT threshold until 30 September, with the rate rising to 12.5% until March 2022.
In these measures and more The Chancellor underlined the Government’s commitment to continue to do what it takes to support the economy and livelihoods through the coronavirus crisis. Calling this a moment of challenge and of change he also highlighted the need to start to take measures which would not only fix the country’s finances but also build the future prosperity of the country. In looking forward he confirmed the Government’s ambition to drive green growth, productivity and innovation.
Key for Devon is the establishment of a Plymouth and South Devon Freeport, one of eight announced across England. Due to be established later this year, Freeports will benefit from more generous customs benefits, tax reliefs and government support. Funding has also been announced to reinstate passenger services on the Okehampton to Exeter train line.
Looking at the area of taxation, it is a bit of a good news/bad news story. On the plus side fuel and alcohol duty has been frozen. As rumoured, the temporary increase in the Stamp Duty Land Tax nil rate residential band to £500,000 has been extended until 30th June, with the band then reducing to £250,000 until 30th September; after which it reverts to its previous level of £125,000. Other tax headlines include:
Income tax. The increase in standard rate personal allowances (to £12,570) and the higher rate threshold (to £50,270) previously announced for the 2021/2022 tax year will go ahead. After that the levels will be frozen until April 2026.
- National Insurance levels will rise in 2021/22 in line with personal rate and higher rate thresholds. After that the higher rate of National insurance will remain frozen until April 2026 with further announcements to be made in respect of the lower rate.
- Inheritance tax thresholds, the pension Lifetime Allowance and the Annual Exempt Amount for Capital Gains Tax will be maintained at their existing levels until April 2026.
- ISA limits will remain at £20,000 for adults and £9,000 for children for the 2021/22 tax year. The savings tax starting rate of 0% for the first £5,000 will also remain unchanged for the same period.
- Corporation tax will remain unchanged until April 2023 and will then rise to 25% for businesses announcing profits in excess of £250,000. Those with profits under £50,000 will continue to pay the 19% rate of tax with a graduated scale of rates between those bands.