In early March, Rishi Sunak delivered the 2021 Budget: a Budget that had far more of a focus on personal finances and investing than in previous years. Here, we delve into some of the key points from this year’s Budget that could impact on UK investors.
Stamp duty and inheritance tax
The stamp duty cut on properties worth up to £500,000 has been extended until the end of June, while the cut on house purchases up to £250,000 will remain in place until the end of September. This – in addition to the announcement of a new mortgage guarantee scheme – saw shares in some of the UK’s largest housebuilders make gains of 4% to 7% in the days before the Budget was formally announced.
Sunak also announced that inheritance tax levels would be maintained at their current levels until April 2026, meaning that if the value of an individual’s estate rises in the meantime, it is more likely that inheritance tax will need to be paid.
Lifetime allowance (LTA)
The lifetime allowance (LTA) – the maximum amount you are able to build up in a pension without incurring a tax charge – will remain at £1,073,100 until April 2026. Hargreaves Lansdown says of the announcement, “This freeze won’t just affect very high earners. Committed and consistent pension savers risk running into the LTA limit, and being punished for their efforts to save for the future.”
A freeze on the income tax threshold
The personal allowance (the amount you can earn without paying tax) has been raised to £12,500, with the higher rate tax band increased to £50,000 – and these thresholds will be maintained until April 2026. Hargreaves Lansdown warns that this could lead to millions of people paying more tax, stating that by 2024/25, families could miss out on a £250 a year saving.
NS&I green savings bond
This summer, NS&I will launch a new green savings bond: “working with government to give UK savers like you the opportunity to contribute towards projects that will accelerate the transition to a low carbon economy, create green jobs, and support the collective effort to tackle climate change.” Further details are set to be published in June, but the government plans “for at least £15bn of green gilt issuance in the coming financial year” to tackle climate change.
The Hill Review
Alongside the Budget, The Hill Review was published: “an ambitious, forward-looking set of recommendations intended to encourage investment in UK business and increase the number of companies choosing to float in the UK”. Says Kieran Stone of Memery Crystal, who were involved in the consultation, “The recommendations, once implemented, will have a transformative effect on the City of London, building on our existing issuer-friendly environment to make us far more competitive in comparison to other overseas markets. We believe that these changes to the listing regime, allied to London’s depth of capital, will turbo-charge the appeal of a London listing.”
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