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WPM: Spring Budget Summary

On Wednesday 3 March 2021, the Chancellor presented his much-anticipated Spring Budget.  After months of speculation as to how the 2021 Budget might use tax increases as a method to rebuild the economy following the impact of the Covid-19 pandemic, much remained surprisingly unchanged for individuals.  This will be a welcome temporary reprieve for many but it remains as important as ever to continue to review your Will and to consider your estate/IHT and succession planning during this time.

The current tax allowances and thresholds will remain until April 2026:

Income Tax

Band £ Rate %
0 – 37,700 20
37,701 – 150,000 40
Over 150,000 45

 

Pension Allowance

Lifetime Allowance Limit £1,073,100
Annual Allowance Limit £40,000
Money Purchase Annual Allowance £4,000

 

Inheritance Tax

Death rate Lifetime rate Chargeable transfers Residence
Nil Nil £0 – £325,000 £0 – 175,000
40% 20% Over £325,000 Over £175,000

 

Capital Gains Tax

Individuals
Exemption £12,300
Standard Rate 10%
Higher/additional rate 20%
Trusts
Exemption £6,150
Rate 20%

 

While the tax rates remain stagnant, future proofing your finances should not and there are a couple of developments that you may wish to consider further.

A new mortgage guarantee scheme is to be introduced in April 2021 allowing lenders to offer 95% mortgages to people who have saved a 5% deposit for homes worth up to £600,000.  The Stamp Duty holiday has also been extended until the end of June 2021, meaning that anyone buying a home worth up to £500,000 will pay no SDLT.

It is therefore potentially a great time to get a foot on the property ladder or think about your next move.  You should consider making or updating your Will following the addition of a new property into your estate to ensure that it is as tax-efficient as possible.  You may also consider taking a pro-acting approach to your financial and health care decisions by putting Lasting Powers of Attorney in place in case of temporary or permanent loss of mental or physical capacity.

The Job Retention Scheme has been extended until 30 September 2021 meaning many will continue to receive furlough payments at a portion of their usual wages.  The need for parents and grandparents to help financially continues to be a very relevant topic.  You may wish to consider putting assets into Trust for the benefit of your loved ones or gifting assets or financial contributions outright during your lifetime.  We can help you assess the pros and cons and offer in-depth advice on the tax implications of the different types of trusts available, and how lifetime gifts may affect the inheritance tax payable on your estate.

If you would like to discuss any aspect of your estate planning or documentation, please contact us – we would be happy to help.

This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: mailinglists@greenwoods.co.uk




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      By completing and submitting this form, you consent to Greenwoods Legal LLP processing your personal data to provide you with the email update services you have selected and any other materials and information about our services that Greenwoods Legal LLP reasonably believes will be of interest to you. You are free to withdraw your consent at any time by emailing mailinglists@greenwoods.co.uk