BARWELL'S BANTER: The key points of the budget
Following on from the Budget presented by the Chancellor on Wednesday March 3, 2021, we thought it might be useful to summarise the key points. This week we are starting with personal tax.
The tax-free personal allowance is currently £12,500 and will increase to £12,570 for the tax year 2021/22 at which point it will be frozen until the end of the 2025/26 tax year.
Tax bands and rates
The basic rate band attracts a tax rate of 20%. In 2021/22 the basic rate band will increase to £37,700 (£37,500 20/21), whilst the higher rate threshold above which 40% tax is payable will increase to £50,270 (£50,000 2020/21).
The additional rate threshold is set to remain at £150,000, income above this level is taxed at 45%. The above thresholds will stay at these levels until 2025/26.
The Chancellor confirmed that the £20 weekly increase to the standard allowance previously announced will remain in place for a further 6 months.
Working Tax Credit
A one-off payment of £500 was introduced in the budget to eligible claimants of working tax credits in an attempt to provide additional support over the coming months.
Mortgage guarantee scheme
The Government will introduce this scheme from April and it will be available on new mortgages up until December 31.
The scheme provides a guarantee to lenders offering mortgages to buyers with a 5% deposit on homes up to a value of £600,000.
The scheme will allow borrowers to fix their initial interest rate for at least 5 years.
Unincorporated businesses which make trading losses in tax years 2020/21 and 2021/22, will be able to carry back these losses for three years and set against earlier profits, in order to obtain a tax repayment.
Losses must be carried back against later years first. These carry back claims are subject to maximum capped levels.
The current annual exempt amount for individuals of £12,300 will remain frozen until the end of the 2025/26 tax year.
Pensions Lifetime Allowance
The pensions lifetime allowance is a limit on the value of pay-outs from your pension scheme that can be made without triggering a tax charge.
The Chancellor announced that the lifetime allowance for pension savings will be frozen at £1,073,100 for tax years 2021/22 to 2025/26.