The Chancellor has given details of the taxation measures in the 2021 budget. There will be no changes of rates of income tax, national insurance and VAT meaning that no worker will have their pay affected as a result of the pandemic.
Personal income tax thresholds will be frozen from next year until 2026 – at £12,570 for the basic rate and at £50,270 for the higher rate.
Corporation tax is to increase to 25% in April 2023 – but it will still be the lowest rate in the G7, says the chancellor. However, 70% of companies – with profits of £50,000 or less will still only be liable for the current 19% rate while only those with profits of £250,000 or more will pay the full 25%.
One of the biggest announcements of the budget is the brand new “super deduction” incentive in a bid to spur investment Companies that invest in their businesses over the next two years will be able to reduce their tax bills by 130 per cent of the cost – a move the chancellor described as “the biggest business tax cut in modern British history.”
The deduction will apply to companies investing in qualifying new plant and machinery assets.
Sharon Smith, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce commented: “Businesses were aware that there would be a price to pay for the governments record breaking support package. The cautious rise in corporation taxes will be offset by the new super deduction incentives for investment and lower rates for smaller firms leaving many businesses thankful.”
“The new Super Deduction insensitive will spurn business investment, leading to innovation and business growth, addressing issues with businesses being cautious and those who are hesitant in investing, driving the recovery of the economy.”
For an overview of all the budget announcements please visit here.
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