Budget 2021

The UK government announced at the Budget 2021 the following subject matters and will legislate them in Finance Bill 2021.

Corporation tax

The corporation tax rate remains at 19% from 1 April 2022 and the rate will increase to 25% from 1 April 2023.

Coronavirus Job Support Scheme

The Coronavirus Job support Scheme is extended to 30 September 2021 across the UK.

Self Employment Income Support Scheme

The self-employment income support scheme is extended to 30 September 2021. People who have filed their self-assessment return in 2019/2020 may be able to claim for the first time.

One-off cash grants of £18,000

A new restart grants for hospitality, accommodation, leisure, personal care and gym businesses in England. If your business falls into these sectors you may entitle to the one-off cash grants of £18,000.

VAT cut for some businesses

VAT to 5% for hospitality, accommodation and attractions is extended to 30 September 2021 thereafter the rate will increase to 12.5% till 31 March 2022.

Statutory Sick Pay (SSP)

If your business have paid staff for self isolating or sick during this pandemic, you can claim the statutory sick pay up to two weeks from the UK government.

Property tax – stamp duty

The stamp duty land tax temporary relief is extended to 30 June 2021. First-time buyers continue to enjoy the tax-free amount of up to £500,000 on a property purchase cost.

The Budget 2021 have been very helpful to help UK businesses to bounce back from this pandemic.

UK income tax rates 2021/2022

Below is the UK income tax rates 2021/2022 to help you to calculate your income tax liability. Your self-assessment period is from 6 April to 5 April and you must deliver your self-assessment return to HMRC by 31 January each year.

England, Wales and Northern Ireland Income tax rates 2021/2022

Personal Allowanceup to £12,570 per year0%
Basic rate£12,570 to £37,70020%
Higher rate£37,701 to £150,00040%
Additional rate over£150,00045%
Source: GOV.UK

Scotland Income tax rates 2021/2022

Personal AllowanceUp to £12,5700%
Starter rateOn annual earning above the PAYE tax threshold and up to £2,09719%
Basic rateon annual earnings from £2,098 to £12,72620%
Intermediate rate£12,727 to £31,09221%
Higher rate£31,093 to £150,00041%
Top rateabove £150,00046%
Source: GOV.UK

Self-employed through a limited company

If you are self-employed individual trading through a limited company and you withdraw money from your company through salary and dividend payment, your salary and dividend amount enter in your self-assessment return form must agree to your signed and dated company accounts and corporation tax return filed with HMRC.

Your total salary for the tax year can also be obtained from your P60 form.

Take note that corporation tax rates 2020/2022 are not the same as the UK income tax rates 2021/2022.

In addition to the above, there is another important document you must submit to Companies House for your limited company that is your confirmation statement.

If you require help with your company accounts, corporation tax return, self-assessment return and confirmation statement filings, feel free to contact our accountants and they will be more than happy to help you.

Lifetime ISA

Lifetime ISA is an individual savings account introduced by the government to help people living in the United Kingdom to save for later life and/or to buy their first home in the UK.

Lifetime ISA is a tax free savings account. Every £100 you put in the ISA account, the government would pay you £25. In other words, the government will add 25% bonus to your savings.

Age limit

You must be over 18 of age and under 40. You must be living in the United Kingdom to be eligible to open a Lifetime ISA account unless you are a Crown Servant (i.e. a diplomat or civil servant) or their spouse or civil partner.

Saving per year

The maximum you could put in your ISA account is £4000 per year and can continue until you reach the age of 50. After you reach 50, you would not be able to put in any more money in it. you account will stay open and your savings will still earn interest or investment returns.

25% Withdrawal charge

If you withdraw your money from your ISA account before you reach the age of 60, the government would take back the 25%, they called it a withdrawal charge.

The withdrawal charge would not be levied if you are:

  • Using the money to buy your first home.
  • Aged 60
  • Terminally ill with less than 12 months to live
  • Transferring to another Lifetime ISA with a different provider.
Use Lifetime ISA to buy first home

You can use your Lifetime ISA to buy your first home, if you have opened the ISA account for more than 12 months. You are buying your home with a mortgage. You property price is below £450,000. You must instruct your a solicitor or a conveyancer to apply for the fund in your ISA account and the fund will pay directly to them.

You can transfer money from Help to Buy ISA to your Lifetime ISA. Take note that the 25% withdrawal charge applied to you if you transfer money from Lifetime ISA to Help to Buy ISA.

Further reading about Lifetime ISA account, click here.

Help to buy ISA

Help to buy ISA is introduced on 1 December 2015 to help people living in the United Kingdom to buy their first home. The government would pay £50 bonus for every £200 you saved and put in your ISA account.

Your initial deposit into your Help to Buy ISA can be up to £1200 and thereafter £200 a month. The bonus is capped at £3000 on £12,000 savings. The bonus is tax free.

You must be 16 years of age, have a valid National Insurance number and a resident in the United Kingdom.

Your first home must be in the United Kingdom. This will be the only property you own and you intend to live there. You are buying your first home with a mortgage.

If your property is in London, the purchase price must not exceed £450,000. Anywhere else in the United Kingdom, your purchase price must not over £250,000.

You may use the ISA calculator to work out how much government bonus you will receive based on the saving you put in your Help to Buy ISA account.

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