The 2021 Spring Budget: how will it affect you?

J-Finance-Budget-2021-Overview

There’s more of the same with an extension to furlough support, the stamp duty holiday and no increase in personal tax rates, plus more help for the self-employed, those claiming Working Tax Credits – and even help to get people on the housing ladder…

2021 Spring Budget

With financial changes coming at us every month over the past year, the Spring Budget doesn’t seem quite as important as it once was, however there is still plenty to take interest in – especially with regards to the extended stamp duty holiday and the all new mortgage guarantee scheme.

Personal Tax

There appears to be good news at first glance, as there is no change in income tax or national insurance rates. However, it must be pointed out that the personal tax allowance will be frozen from April 2022 to 2026. This means that you will be taxed on any income over £12,570 for the next few years – which means that future pay rises may not see you pocketing as much cash as you would hope. The higher tax rate threshold has also been frozen at £50,270 for the same time period and therefore more workers edging over into the higher bracket, simply through annual pay rises.

Stamp Duty

As we said, there’s a couple of good bits of news for home buyers – with the stamp duty holiday extending from 31 March until 30 June 2021. Additionally, until 30 September 2021, no stamp duty will be charged on a residential property bought for up to £250,000.

Mortgage Guarantee Scheme

The introduction of a government guarantee scheme that will enable first time buyers to get a foot on the property ladder with just a 5% deposit. Good news for first time buyers trying to save and parents who are hoping to help their adult offspring leave the nest!

Furlough Scheme

The furlough scheme is being extended until September, as Rishi Sunak tries to protect jobs and companies, and the self-employed will be eligible for another two grants. There’s good news for self-employed workers who submitted a tax return for the first time in 2019-2020 – they will now be eligible to claim the fourth and fifth grants.

Inheritance Tax

Inheritance Tax thresholds and the annual exempt amount in Capital Gains Tax will stay the same. As with income tax thresholds, this will mean they do not increase to take account for inflation. A freeze on the pension lifetime allowance is likely to affect high earners in final salary pension schemes.

Working Tax Credit

Those on working tax credit will receive one-off payment of £500, while those claiming Universal Credit will continue to receive the £20 top-up payment for the next six months.

Find the full rundown of the budget announcements at: www.bbc.co.uk/news/uk-politics-56266773.

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Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across England and Wales. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email contact@jfinance.co.uk.