BUDGET 2021 – LEGAL UPDATE
When the budget was announced on 3rd March, we were keeping a close eye on any changes which may affect our clients.
Here are the highlights which may be of relevance to you.
INHERITANCE TAX ALLOWANCES TO BE FROZEN
Each person currently has a nil rate band of £325,000, being the amount up to which they can give away upon death completely free of inheritance tax (IHT).
In addition, and more recently introduced, is the residence nil rate band and this is currently set at £175,000. It allows IHT free gifting of a property upon death to direct descendants up to this amount with the exception that this allowance will begin to reduce for estates worth more than £2m.
Overall, there is potential for gifting upon death of up to £500,000 free of IHT.
Inheritance tax allowances will be frozen until April 2026. This is good news as there was speculation about this tax increasing to counteract the increased national debt arising as a result of COVID-19 and the impact this has had on the economy.
STAMP DUTY LAND TAX HOLIDAY EXTENDED
Stamp duty is usually payable for any property purchases over £125,000.
The government recently introduced a stamp duty holiday whereby the purchase of property worth up to £500,000 would have a nil rate stamp duty banding applied. It has now been announced in the budget that this will be extended until 30th June 2021.
Following that, the nil rate banding will be up to the value of £250,000 until the 30th September 2021, after which the usual stamp duty banding rules will resume.
CAPITAL GAINS TAX EXEMPTION
Where property is disposed of and there is an increase in the original purchase value and the sale value, there may be a capital gains tax liability. This also applies where property is sold following a death.
The annual exemption for individuals and personal representatives dealing with estates will remain at £12,300 until April 2026, and the amount for most trustees will also remain at £6,150.
CORPORATION TAX INCREASE
Businesses may see their rate of corporation tax rise.
The current rate of 19% will remain as it is for the coming tax year, but it will increase to 25% from April 2023 for businesses with profits of £250,000 or over.
The rate for businesses with profits of less than £50,000 will remain at 19%.
Should you have any queries regarding any points raised, please contact us via our website or by calling 01752 660384.
"As a family we found the service provided to us was delivered with ’empathy’ and was in fact ‘outstanding’, we would most certainly recommend Woollcombe Yonge to friends.”