Budget Update – Year to 5 April 2021

From 6 April 2020, the thresholds will change to the amounts set out below (this does not include rates in Scotland).

                                                          2021              2020

Personal allowance                             £12,500           £12,500

National Insurance (PT)                     £9,500              £8,632

Higher rate threshold 40% tax         £50,000           £50,000

Marriage allowance                             £1,250              £1,250

 

Limited company shareholders:

Dividend allowance                              £2,000               £2,000

The dividend allowance is particularly important to owner managed businesses. The allowance of £2,000 for the year to 5 April 2021 is set at a rate of 0%, meaning any dividend income in the year up to £2,000, will be taxed at 0%.

Corporation tax is set to remain at 19% (the same as for the year to 31 March 2020).

 

Self-employed:

Class 4 National Insurance                        9%                   9%

Rates for taxable profits

over £9,500 up to                                        £50,000          £50,000 (over £8,632.00)

Class 2 National Insurance                       £158.60         £156.00

 

Employment Allowance:

The employment allowance is set to increase from £3,000 per year to £4,000 from 6 April 2020. The employment allowance cannot be claimed in company’s with only one director. There is more information on the employment allowance here.

 

Capital Gains Tax (for individuals):

Annual exemption                                      £12,300       £12,000

 

VAT Threshold

The taxable turnover threshold which determines whether a business or person must be registered for VAT, will remain at £85,000.

The taxable turnover threshold which determines whether a business or person may apply for deregistration will remain at £83,000.

 

Reporting Capital Gains:

From 6 April 2020, if you’re a UK resident and sell a residential property in the UK that is not your main residence, you’ll have 30 days to tell HMRC and pay any Capital Gains Tax owed. There is more information on this here.

 

IR35 off-Payroll Changes:

The Government has announced that planned changes to come in from 6 April 2020 for contractors have been delayed by one year. IR35 reforms have already come in for public sector bodies and was due to be introduced to the private sector for medium and large sized businesses. It has been announced that this change will be delayed by one year to 6 April 2021. There is more information on the changes here.

 

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