- The Chancellor announced lifetime allowance (LTA) limits for pensions savings will be frozen at £1,073,100 until 5 April 2025. There was no change announced for the annual allowance (AA) rules which means the standard AA remains at £40,000, the Tapered AA between £4,000 and £40,000 and the Money Purchase AA at £4,000.
- Corporation tax, the rate will remain at 19% for the years starting 1 April 2021 and 1 April 2022 but from 1 April 2023, the headline corporation tax rate will be increased to 25% applying to profits over £250,000. (these measures do not impact the 20% ‘tax credit’ on UK bonds available to individuals, trustees and corporate investors)
- The dividend nil rate allowance, the 0% starting rate for savings or the personal savings allowance were also frozen at 2020/2021 levels.
- Those taking dividend income will face an additional 1.25% tax from April 2022. The dividend allowance will stay at £2,000 and not rise with inflation.
The CGT annual exempt amount (AEA) will remain at £12,300 for the next five years for individuals and personal representatives. For most trusts, the limit will be £6,150.
- Inheritance Tax, both the nil rate band and residence nil rate will remain at existing levels of £325,000 and £175,000 respectively until 5 April 2026. The residence nil-rate band taper threshold continues at £2 million.
- The personal allowance is currently £12,570. The Chancellor announced in the March 2021 Budget that the personal allowance will be frozen at £12,570 for the tax years 2022/23 to 2025/26. There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. So there is no personal allowance where adjusted net income exceeds £125,140.
- With effect from 6 April 2021 the Personal Allowance and higher rate threshold (HRT) increased in line with CPI to £12,570 and £50,270 respectively and will remain at these levels until 5 April 2026.
- Inflation is expected to reach 4.4% next year.
If you wish to discuss any of the points raised, please contact your Westerby Consultant. You can contact us by telephone on 0116 2470304, or by e-mail to email@example.com.