Today’s Budget Headlines from Samuel Phillips Law
Wednesday, March 3, 2021
Wednesday, March 3, 2021
Residential Property Headlines
Purchasers will welcome the announcements made in today’s Budget
Stamp Duty Land Tax
- Holiday has been extended to 30th June 2021.
- Nil rate band will be increased to £250,000 from 30th June 2021 – 30th September 2021
- Nil rate band will be £125,000 from 1st October 2021
Mortgage Guarantee Scheme
- Return of 95% mortgages
- The Government will provide a 5% deposit guarantee
- A number of lenders are already on board including Lloyds, NatWest, Santander, Barclays and HSBC and it is expected more will follow.
Head of Residential Property
Wealth Planning – Tax Update
The budget today confirmed that there will be no immediate changes to inheritance tax (IHT) or capital gains tax (CGT) – although no increases to tax free allowances either.
What does this mean for tax planning?
The short answer is “TAKE ADVICE NOW”.
Prior to Covid-19 there were top to bottom reviews of IHT and CGT with radical proposals made for change. It is highly likely that once the immediate threat of Covid-19 recedes, the Government will be looking to these taxes to generate additional funds.
If your assets are over or approaching the basic IHT nil rate band threshold (£325,000 per person), then taking advice now will allow you to take advantage of the current exemptions, allowances, reliefs and rates whilst they remain. This is particularly the case for anyone with assets that benefit from generous allowances such as Business Property Relief or Agricultural Property Relief as well of those making significant regular gifts from income.
Capital Gains Tax
For anyone considering selling or gifting assets, you should consider that there may be changes on the horizon that make this less attractive in future years. Timing is key.
Trusts have long been associated with tax planning and future changes to IHT and CGT will have an impact on Trusts, as well as individuals. Trustees may find themselves more exposed to future complaints by beneficiaries if they do not at least take the opportunity to review the Trust now. Future changes to tax rates could not only impact the taxation of assets within trusts, but also entry, exit and periodic charges.
Associate Solicitor – Wills Probate & Trusts
Budget Update: Employment
Coronavirus Job Retention Scheme (CJRS) (furlough):
- CJRS extended until the end of September 2021. Workers to continue to receive 80% of wages for any unworked hours (up to the cap of £2,500 per month).
- Employers to contribute 10% wages for unworked hours from 1 July 2021 (government contributing 70%)
- Employers to contribute 20% wages for unworked hours from 1 August 2021 (government contributing 60%)
Self-employed Income Support Scheme (SEISS):
- The Fourth Grant will be available from April 2021. This covers February – April 2021 and will be worth up to 80% of three months’ average trading profits (capped at £7,500).
- A Fifth Grant will be available from July 2021. Where an individual can prove their turnover has fallen over 30%, then the grant will be worth up to 80% of three months’ average trading profits.. Where turnover has fallen less than 30%, the grant will be worth up to 30% of three months’ average trading profits.
- The Fifth Grant is expected to be availability from late July 2021.
- Approximately 600,000 more people will now be able to claim under this scheme (provided that they have submitted a 2019/2020 tax return)
“Re-Start” Business Grants
- For Hospitality, Hotels, Gyms and Leisure – grants of up to £18,000 per premises. Calculated according to property rateable value.
- For Non-Essential Retail – grants of up to £6,000 per premises. Calculated according to property rateable value.
- Local authorities are to distribute the grants.
VAT for Hospitality, Hotels and Leisure Businesses
- VAT will remain at the reduced rate of 5% until 30 September 2021.
- VAT will then rise to £12.5% until 30 March 2021.
Business Rates Relief for Retail, Hospitality and Leisure Businesses
- 100% Business Rate “Holiday” will remain in place until 30 June 2021.
- From 1 July 2021 until 30 March 2022, business rates will be discounted by two thirds, capped at a value of £2 million for closed businesses. The cap will be lower for businesses which have been able to stay open.
Universal Credit and Working Tax Credits
- Universal Credit uplift of £20 per week will continue until September 2021
- Those who qualify for Working Tax Credits will receive a one-off payment of up to £500
National Living Wage
- The National Living Wage for those aged 25+ will increase from £8.72 to £8.91 from April 2021
Solicitor – Employment
Business Loan Update
Recovery Loan Scheme:
- New “Recovery Loans Scheme” offering loans from £25,000 to £10m to businesses, with the government providing lenders with an 80% guarantee.
- Replaces the Bounce Back Loan and Coronavirus Business Interruption Loan Scheme.
- The new Recovery Loans Scheme is in addition to the £5bn restart scheme offering grants to help retail, hospitality and personal care businesses.
Solicitor – Commercial and Litigation
Business rates for hospitality and leisure businesses will not pay business rates for three months. Rates will then be discounted by two thirds for the remaining nine months.
VAT on hospitality and tourism
The five percent rate of VAT payable on supplies of hospitality (food and non-alcoholic beverages for consumption on premises) and hotel and holiday accommodation will be extended until September. Thereafter, the rate will be increased to 12.5% for the following six months before returning to the usual 20% rate.
Further company support
Restart grants for businesses forced to close at £6,000 per premises for non-essential outlets and £18,000 for gyms, personal care providers and other hospitality and leisure businesses.
Property and Infrastructure spending and private investment stimulus
Additional government funding for ‘new town deals’ for regeneration to establish special economic zones with favourable infrastructure planning. Importantly for the north east, the Treasury will establish an economic campus in Darlington bringing jobs and increased investment to the region.
The government will be making an £150m for community groups to take over pubs at risk of closure available.
Capital Gains Tax “super-deduction” policy to encourage investment into the UK, which would enable companies investing in qualifying new plant and machinery assets to benefit from a 130 per cent first-year capital allowance. The relief will end before the 2023 higher rate of corporation tax.
Capital Gains Tax loss carry back: extended to 3 years with £2,000,000 cap.
Creation of a new Infrastructure Bank to be set up with the aim of funding public and private projects.
Creation of Freeports (including Humber and Teeside) to establish areas where businesses will benefit from more generous tax reliefs, customs benefits and wider government support; including an enhanced 10% rate of Structures and Buildings Allowance for constructing or renovating non-residential structures and buildings, business rates and Stamp Duty relief, and an enhanced capital allowance of 100% for companies investing in plant and machinery within Freeport tax sites.
Head of Commercial Property