Budget 2021 – As You Were
Pensions and the reliefs/allowances surrounding them have survived another Budget! The Chancellor announced last Wednesday, that the government will maintain the Pension Lifetime Allowance at its current level of £1,073,100 until April 2026 and despite considerable speculation, the core pension tax relief system has remained unchanged. Pensions savings have long been a tax efficient form of investment, reducing tax liabilities now whilst saving for the future, and in an inheritance tax efficient manner. Taxpayers may wish, therefore, to consider making pre 5 April 2021 contributions, either personally or via their company.
The Chancellor also announced that the Individual Savings Account (ISA) annual subscription limit will remain at £20,000 for the 2021/22 tax year. Many will have been holding off to see what came out of last week’s budget but, following the announcements made, it would appear to be tax planning as usual with no changes to EIS, VCT, charitable donations or pensions.
There were also no changes to Capital Gains Tax (CGT) and Inheritance allowances and only a small increase to the personal allowance for the 2021/22 tax year, which will then be frozen until 5 April 2026.
With just under a month to go to the end of the tax year, if you have not already done so, you should look to review your 2020/21 tax affairs to ensure that you are not losing out on valuable reliefs. With some of these reliefs it’s a case of if you don’t use it, you lose it. Don’t overlook year-end tax planning as this can result in significant tax savings which will reduce your outgoings at a time of such financial instability. Our EQ Taxperts will be delighted to speak with you if you have any queries, please get in touch by calling one of our offices or emailing [email protected].
If you want to read more about what was announced in the Budget, you can download our Budget Summary here.