Spring Budget Statement – March 2021

As we head toward the anniversary of the initial Lockdown period for the UK, the Chancellor took the opportunity to highlight just how much Coronavirus has cost the UK Economy. Citing unprecedented debt levels, the Chancellor confirmed that the Government would be borrowing a peacetime record of £355Bn, recognising that it will take decades to manage this sort of debt.

Yet, he was also keen to emphasise that this didn’t mean that the debt should not be tackled or that support for those affected by the Virus should stop. The Government has already announced the continuation of the Furlough scheme through to the end of September, along with the £20 increase in Universal Credit and continued support for the Self-employed. As we continue the slow ‘roadway to recovery’, this is to be welcomed.

There was one major tax announcement, and it was quite significant for business. Corporation Tax will see a big increase, but only from 2023/24 and only for those firms making profits in excess of £250,000. Firms earning profits less than that may see a smaller increase or even no increase at all if profits are low enough. Whilst an increase was expected, the size of the increase was not and has caused much discussion. However, we emphasise again that this increase does not happen for another two years.

Another way to increase tax revenue is simply to freeze tax allowances and this happened across many allowances that affect individuals. As wages or assets rise, so it is more likely these increases will be taxed. The benefit of this to the Chancellor is that he can confidently announce that nobody will see a reduction in take home pay. Freezing allowances across both income and investments will raise significant revenue.

Finally, there was some good news for those buying a house as the Stamp Duty holiday has been extended.