2021 UK Budget Highlights Released

The 2021 UK budget was presented to parliament in early March. The budget will continue to incorporate allocations to various coronavirus support measures.

There are no notable changes in key rates for this year. Corporate tax rate remains at 19%, although it will rise considerably in the next two years. The insurance contribution rates for both employee and employer also remains the same, along with income tax, CGT, and VAT rates.

The 2021 UK budget highlights are segmented and listed below:

Individuals:

• Beginning April of 2021, the standard personal allowance amount will raise from £12,500 to £12,570 annually. This amount will remain the standard for the next five years.
• Up until the end of 2022, the standard tax rate threshold for individual income will be raised from £37,500 to £37,700
• For the 2021-22 year, insurance contribution rates will rise from £9,500 to £9,568 for the primary threshold, and will rise from £8,788 to £8,840 for the secondary threshold. The upper earnings limit threshold will persist as is until 2026.
• A single payment of £500 will be distributed to Working Tax Credit candidates within the upcoming 6 months.

Employers:

• A income tax payment exemption has been introduced for employers as a coronavirus support initiative. This exemption is applicable to reimbursement payments made to employees for COVID-19 test expenses for 2020-21. It will continue to be applicable throughout the 2021-22 tax year, diminishing tax liability for both employers and employees.
• Beginning April 2021, minimum wage rate will rise from £8.72 to £8.91.

Corporations:

• Beginning April 2023, the tax rate on corporate income will rise from 19% to 25% on returns in excess of £250,000. Smaller businesses with returns below £50,000 will continue to be taxed at the original 19% rate. Furthermore, businesses taxed at the 25% rate whose returns fall within the £50,000 – £250,000 bracket will be eligible to apply for marginal relief.
• The DPT (diverted profits) rate will raise from the current 25% to 31% in April of 2023. This increase is intended to dissuade international firms from developing schemes to reduce their UK corporate tax liability.
• Income tax and insurance contribution exemptions will be extended to April 5^th, 2022; applicable to COVID-19 work related expenses.
• With intent to aide small firms in acquiring an international candidate base, government officials will introduce a new visa scheme.

COVID-19 Support Initiatives

• The Coronavirus Job Support Scheme has been extended until September of 2021 throughout the UK
• A Recovery Loan Scheme will be introduced by government officials beginning April 6^th, 2021. It will be accessible to all companies, and will give financiers an 80% guarantee on loans falling within the £25,000 and £10 million bracket.
• Employers of smaller and mid-sized firms will maintain eligibility to recover a maximum of two weeks of SSP (Statutory Sick Pay) expenses for each employee
• Incentive payments toward apprenticeship hiring will be extended in England to September of 2021, and the amount of these payments has been raised to £3,000.

Employer Considerations:

Employers will continue to receive coronavirus support options throughout the fiscal year of 2021. Key rates will remain at a fixed rate for the year, however, they will begin to rise in the next coming years.