Many hoped that Wednesday’s budget would lay the foundations for a strong and sustained recovery as we hopefully edge closer to the end of lockdown. The Chancellor announced that two of the three musketeers (namely the furlough scheme, the temporary cut to stamp duty land tax rates and the 5% VAT cut for hospitality) would continue their charge until the end of September 2021. The temporary cut to SDLT will continue until the end of June 2021, easing the pressure for those in a chain and allowing the housing market to remain supported as lockdown eases.
In terms of the recovery Labour’s leader, Keir Starmer accused the Chancellor of papering over the cracks rather than tackling a full on restoration of the Treasury’s finances. With a chill in the air, it was no surprise that the Chancellor announced his intention to freeze the income personal allowances and higher rate threshold from April 2022 to April 2026.
As widely expected the rate of corporation tax will increase to 25% from 2023. A business with profits of less than £50,000 will continue to be taxed at 19% whilst a taper above £50,000 will be introduced so that only businesses’ with profits in excess of £250,000 will be taxed at the full 25% rate. It will be interesting to see what rate the marginal rate is set at. Many businesses have traded as corporate entities due to the historically low rates of tax but this may change going forward. This news may also see families returning to more traditional methods of managing their wealth rather than using family investment companies. All is not lost though as Rishi announced the birth of the super deduction regime, which will run until March 2023 and will let companies cut their tax bill up to 25p for every £1 they spend on capital investment. The Chancellor is keen for companies who have managed to save cash through the pandemic to start spending some to kickstart the economy and create jobs.
The Chancellor must also be a keen fan of “Dragons Den as he has pledged £375m of the treasury’s cash to launch a fund that will invest in fast growing UK technology companies such as those working in life sciences, quantum computing or clean tech that are aiming to raise at least £20m of funding. This announcement is really good news for the sector as it will assist fast growing companies recruit high-skilled workers.
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.