2021 Spring Budget Summary – Tax Updates

Personal Tax

The personal allowance and basic rate limit are frozen at their 2021-22 levels up to and including 2025-26.   

The personal allowance is £12,570, and the higher rate threshold is £50,270.

Inheritance Tax, Pensions Lifetime Allowance, Capital Gains Tax

All rates and allowances have been frozen at their 2021-22 levels up to and including 2025-26.

VAT Registration Threshold

Frozen at £85,000 up to and including 2025-26.

Corporation Tax

This is the main headline annoucement!  Corporation Tax rates will rise from 19% to 25%  in April 2023.

However, if your profits are below £50,000 per year, you will continue to pay corporation tax at 19%

Companies with profits between £50,000 and £250,000 will pay tax at the main rate of 25%, reduced by a marginal relief providing a gradual increase from 19% to 25% in the effective Corporation Tax rate.

Super Deduction for purchasing plant and machinery *

To try and encourage spending, when a limited company buys plant and machinery, it can claim tax relief on 130% of the cost.   This is effective on purchases made between April 2021 up to 31 March 2023.

Crucially though, this only applies to limited companies and not partnerships or sole traders, who will continue to get 100% tax relief. 

*subject to maximums