Exploring Budget 2021 Changes: What They Mean for You

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Chancellor Rishi Sunak delivered his second Budget on March 3, 2021, prioritizing COVID impact to safeguard jobs and livelihoods. What were Budget 2021 highlights, and how do changes affect you? The Budget 2021 Changes go as follows:

Corporation Tax

The Chancellor noted Corporation Tax rate remains at 19%, increasing to 25% in April 2023, with tapered relief for businesses earning £50,000 to £250,000. Profits up to £50,000 subject to 19% rate. Above £50,000, a taper applies, and £250,000+ income firms face 25% tax.

Earlier COVID-19 loan recipients remain eligible under new scheme criteria.

Chancellor commented:

“I’m protecting small businesses with profits of £50,000 or less, creating Small Profits Rate, holding at 19%. Around 70% of companies – 1.4 million businesses – unaffected.”

Recovery Loan Scheme

On Wednesday, the Chancellor also announced Recovery Loan Scheme succession plan from April 6, offering loans £25,000 to £10 million, with 80% loan value government guarantee.

Chancellor’s announcement, coupled with prior exit strategies, offers companies essential lifelines.

Self-Employment Grants

Chancellor Rishi Sunak extended Self-Employment Income Support Scheme (SEISS) to September via further grants (fourth and fifth grant). More details on Gov website.

Over 600,000, many new to self-employment in 2019-20, qualify for SEISS. Similar qualifications to the third grant. More info to follow.

CAPITAL GAINS TAX

The budget retains current CGT rates. The rate remains 10% until the income tax base rate band arises, then increases to 20%. Certain gains, mainly chargeable gains on residential housing, face 18% and 28% rates. Exceptions apply for Private Residence Relief.

Corporate transactions and exits rose recently as owners sold shares or properties with lower gains tax.

BADR Changes

BADR allows lower Capital Gains Tax on asset disposal (including shares) up to £1m allowance (compared to the previous £10m limit). Assumed Rishi Sunak’s budget would change Business Asset Disposal Relief (BADR). Expected BADR abolition meant higher Capital Gains Tax.

CGT increase under Treasury consideration; change likely in Autumn 2021. Business owners planning exits and profit from tax relief should act soon.

What’s Next?

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