Hopes of a “swifter and more sustained economic recovery”
14/05/2021
Chancellor of the Exchequer, Rishi Sunak, delivered his second Budget on 3 March, which centred on a three-part plan to continue supporting people and businesses through the pandemic, to fix public finances once recovery is underway and to lay the foundations for the future economy.
The Chancellor opened his statement by revealing the latest predictions from the Office for Budget Responsibility (OBR) which provide hope of “a swifter and more sustained economic recovery”1 than previously expected. The latest forecast predicts growth for the UK economy of 4% in 2021 and 7.3% in 2022. Mr Sunak also confirmed details of various COVID-19 support measures to bring total fiscal support to over £407bn.
What about Tax?
From a taxation perspective, the Chancellor was left with little room for manoeuvre as the Conservative manifesto pledged not to lift Income Tax, National Insurance or VAT rates, so some key tax thresholds will be frozen. The Personal Allowance will rise with inflation in April as planned, to £12,570, before 20% Income Tax becomes payable, and the higher rate threshold, at which people start to pay tax at 40%, will rise to £50,270.
However, both thresholds will then be frozen at these levels until April 2026. Similarly, tax thresholds for the pension Lifetime Allowance, Inheritance Tax and the annual exemption for Capital Gains Tax will remain until 2026. Interestingly, a new NS&I retail ‘green savings bond’ will be launched later this year to fund renewable energy and clean transport projects.
If you need further assistance with any of your pension tax calculations then please do contact your Lloyd & Whyte IFA.
Contact your Lloyd & Whyte IFA. 01823 250750
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