Tax rate changes which may impact your business

Following the Spring Budget announced by Chancellor Rishi Sunak we have put together a summary of the important tax changes that may impact you and your business.

Personal Allowance and Higher-Rate Threshold (HRT):

• The income tax Personal Allowance will rise with CPI as planned to £12,570 from April 2021 and will remain at this level until April 2026.
• The income tax HRT will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026.
• The Personal Allowance applies across the UK. The HRT for savings and dividend income will also apply UK-wide. The HRT for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland.

Corporation Tax:

• The rate of Corporation Tax will increase from April 2023 to 25% on profits of over £250,000.
• The good news is that the rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.
• In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK.

Pensions Lifetime Allowance:

• The government will maintain the Lifetime Allowance at its current level of £1,073,100 until April‌‌‌‌ 2026.

Income Tax exemption for employer-reimbursed coronavirus antigen tests for tax year 2020-21 and 2021-22:

This measure will continue the Income Tax exemption for payments that an employer makes to an employee to reimburse for the cost of a relevant coronavirus antigen. There will be no Income Tax liability for the employee or employer.

Continuation of the home office equipment expenses COVID-19 easement for the 2021-22 tax year:

The income tax exemption that allowed employers to reimburse employees, free from income tax and NIC's, for the cost of home office equipment for employee's working from home as a result of the COVID-19 outbreak, has been extended from 5th April 2021 to 5th April 2022.

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