Local pros and cons to the UK’s 2021 budget

Thursday 04 March 2021

The UK budget has been announced for 2021, with a number of ramifications for Guernsey business.

One of the main headlines from the Chancellor of the Exchequer Rishi Sunak was a rise in large company profit taxation in 2023, with corporation tax rising from 19% to 25%.

This could affect a number of local businesses that pay corporation tax in the UK, mainly those who own property there.

“The headline grabbing-tax measures are a freeze in most personal tax allowances from 2022 onwards,” said BDO Tax Director, Mark Savage, “and the rise in corporation tax rates to 25% in 2023, albeit with a reduced rate for smaller companies.”

Pictured: “It will be interesting to see if the effects of these decisions will allow the UK economy to grow quickly enough,” said Mr Savage on the UK’s response to its pandemic accrued debt.

“It was also confirmed that Guernsey and other non-UK resident purchasers of UK residential property will pay and SDLT surcharge of 2% on top of usual UK rates from 1 April this year,” said Mr Savage.

There is some good news to be taken from the 2021 budget announcements, with a Stamp Duty Holiday extension allowing savings on UK investments.

The SDLT holiday has been extended to 30 June which is beneficial for investors looking to purchase UK Buy-to-let properties.

Business Development Manager at Skipton International, Roger Hughes, said: “Since the announcement of the SDLT holiday last year, Skipton has experienced a significant increase in applications which has led to our mortgage teams being kept incredibly busy.”

Pictured: Chancellor Rishi Sunak said there will be no IT, NIC or VAT rises in the UK and the furlough scheme will be extended.

The Director of Tax at Grant Thornton has weighed in on the UK’s 2021 budget, highlighting a number of initiatives that could have local implications.

“The idea of a Freeport may create inward investment and infrastructure investment,” said John Shenton. “A Visa reform scheme to encourage and promote the importation of talent, in stark contrast to some local migration policies, may drive future economic growth.

“A mortgage guarantee scheme to assist in home ownership in an overheated market; and the establishment of a green infrastructure bank to fuel the green agenda to name just a few,” he said.

It has been surmised that Britain is relying on the vaccine to get the country working again, before inevitable tax rises.

“For now it seems that it is more of the same in theatre land, and very much wait and see what the next six months hold in the hope that the box office recovers quickly.”