Following the Chancellor’s announcement of the Spring Budget 2021, we have put together information on what it means for current holiday homeowners, as well as those looking to invest in a holiday home.
Stamp Duty Land Tax (SDLT): The temporary increase in the residential SDLT Nil Rate Band to £500,000 has been extended to 30th June 2021. The Nil Rate Band will reduce to £250,000 from 1st July and return to £125,000 on 1st October 2021. If buying a new residential property means you’ll own more than one, you’ll usually have to pay 3% on top of SDLT rates.
Business Rates: The government will continue to provide eligible retail, hospitality, and leisure properties in England with 100% business rates relief from 1st April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1st July 2021 to 31st March 2022.
VAT: The £85,000 registration threshold will remain frozen until at least 2024. The 5% reduced rate benefiting the tourist and hospitality industry will be extended until 30th September followed by an interim rate of 12.5% until April 2022. Until 30th September, those on the flat rate scheme will continue to benefit from the 0% rate, followed by an interim rate of 5.5% before returning to 10.5% in April 2022.
Corporation Tax: The rate will rise to 25% on profits from the current 19% from April 2023. For earnings below £50,000, the small profits rate of 19% will continue. The rate will be tapered between £50,000 and £250,000.
Personal Tax: Annual allowance and higher rate threshold will rise with CPI to £12,570 and £50,270 in 2021. These thresholds will remain frozen until 2026.
Inheritance Tax: The thresholds are frozen until 2026.
Capital Gains Tax: Annual Exemption of £12,300 frozen until 2026.
Pensions: Lifetime Allowance of £1,073,100 frozen until 2026.
Restart Grants: ‘Restart Grands’ in England will be provided by the government up to £18,000 per premises for hospitality, accommodation, leisure, personal care, and gym businesses. The details on eligibility criteria have yet to be announced. Further discretionary grant funding will be provided to local authorities.
130% Super Deduction: From 1st April 2021 until 31st March 2023, investments in qualifying assets will benefit from a 130% first-year capital allowance. In November, the government announced the extension of the Annual Investment Allowance temporary £1 million cap until the end of 2021.