UK Budget March 2021: What tax changes were announced?
UK Budget March 2021: What tax changes were announced?
The UK Chancellor delivered his first post-Brexit Budget on 3 March 2021. Despite all the rumours of potentially significant tax changes, the Chancellor chose that now was not the right time. However, future changes (in particular to CGT & IHT) may not be too far away. Read on to learn more.
The UK Chancellor, Rishi Sunak, delivered the latest UK Budget on 3 March 2021, the first since the UK completed its departure from the EU.
In this Blog, we reflect on the actual announcements made by the Chancellor and look ahead to future changes that could be on the horizon.
Despite all the rumours of potentially significant tax changes (see in particular my previous Blog), the Chancellor chose that now was not the right time to make material tax changes, especially with the economy still fragile and suffering from the impact of the Covid-19 pandemic. The following announcements may however be of interest to individuals and businesses in Switzerland:
UK corporation tax
The UK corporation tax rate will rise from the current 19% to 25% with effect from 1 April 2023 (although a lower rate of 19% will remain for small businesses with profits of GBP 50,000 or less). As a counter-measure, a temporary extension of the trade loss carry back period from 12 months to 3 years has been announced for losses arising in UK tax years 2020/21 & 2021/22. This will provide much welcomed cash-flow benefits for those business hardest hit by the pandemic.
Additionally, a consultation has been launched on improving the competitiveness of the UK’s R&D tax credit schemes, which runs until early June 2021.
Swiss businesses with UK branches or subsidiaries should be aware of the above developments and plan accordingly.
UK income tax
No material changes were made to income tax rates or reliefs in the latest Budget. It was further announced that personal tax allowances would remain frozen for at least the next 4 years.
UK resident non-domiciled (UKRND) regime
As expected in my previous Blog, no changes have been made to the UKRND regime. This will be welcome news for Swiss banks and fiduciaries that have a large UKRND client base.
Future consultation on the taxation of capital in the UK?
Although the Chancellor chose not to make any of the predicted changes to the UK’s capital gains tax and inheritance tax regimes, it was confirmed that a range of consultations would be launched on 23 March 2021. It is quite likely that one of these consultations will focus on the future taxation of capital in the UK (e.g. covering capital gains, inheritance and potentially wealth taxes). The developments in this area should be monitored (and where relevant, responded to) by individuals and businesses with a close connection to the UK, since any future reforms could be material.
