A Budget intended to help the UK recover from Coronavirus brought higher taxes for businesses and extended protection for individuals but – perhaps understandably – few changes for the pensions world.
The only exceptions to this, were freezing the Lifetime Allowance at £1,073,100 until April 2026, which was widely expected within the UK pension industry and the Chancellor confirming that a consultation will be launched to analyse whether allowing pension scheme investments in higher, long-term productive investments could help to accelerate the rate of recovery.
Other non-pension key points are set out below.
Corporation tax increased to 25%
The Chancellor announced that corporation tax will be increased to 25% from April 2023 for businesses with annual profits over £250,000. Businesses with profits under £50,000 will continue to pay the current 19% rate and the tax rate will be tapered between these amounts.
Furlough scheme extended to September 2021
The Chancellor announced that the furlough scheme will continue until September 2021, with companies starting to contribute from July as the scheme is phased out. Support for the self-employed and those receiving Universal Credit will also continue until September.
Personal tax allowances increased but then frozen until 2026
Income tax thresholds will increase to £12,570 for basic rate and £50,270 for higher rate, but they will then remain fixed until April 2026. There is a cost to this for most taxpayers if their incomes are increasing but tax thresholds are not.
Simon Hubbard
3 March 2021