The Finance Bill puts into law measures announced at Budget to help ensure millions of jobs and livelihoods continue to be protected as part of the government’s Plan for Jobs.
- the Finance Bill 2021 is published today, 11 March, legislating for tax changes announced at the Budget to support jobs and livelihoods
- extensions to stamp duty and VAT cuts and new super-deduction effective from April 2021
- changes taking effect also strengthen finances and secure investment-led recovery
The Bill will ensure a number of tax changes set out by the Chancellor at last week’s Budget will take effect from the start of the next tax year beginning in April 2021, including:
- the extension of the stamp duty holiday
- extending the VAT cut for tourism and hospitality to September
As the country begins to recover from the effects of the pandemic, the Bill also legislates to help strengthen the public finances in the medium term through:
- Increasing the rate of Corporation Tax to 25% on profits over £250,000 from April 2023, balancing the need to raise revenue with the objective of having an internationally competitive tax system. Over 90 per cent of businesses will pay less than the 25%.
- Maintaining Income Tax Personal Allowance and Higher Rate Threshold at 2021 levels. This is a progressive measure: the richest households will contribute the most.
- keeping the Capital Gains Tax Annual Exempt Amount (AEA), the inheritance tax nil-rate band, and the pensions Lifetime Allowance at their current levels
The Bill also helps deliver a fairer and more sustainable tax system too through legislating to:
- Implement a Plastic Packaging Tax which encourages the use of recycled plastic instead of new plastic within the packaging. The rate of the tax is £200 per tonne of plastic packaging which contains less than 30% recycled plastic content.
- Reform the penalty regime for VAT and Income Tax Self-Assessment (ITSA) to make it fairer and more consistent. The new late submission regime will be points-based, and a financial penalty will only be issued when the relevant threshold is reached.
The Bill helps drive an investment-led recovery through:
- the ‘super deduction’ – from 1 April 2021 until 31 March 2023. The independent OBR has forecast that, at its peak, the super-deduction will raise the level of business investment by 10%, or roughly £20bn a year.
- supporting the introduction of Freeports through allowing the government to designate ‘tax sites’ in Freeports in Great Britain, where businesses will be able to benefit from a number of tax reliefs.
The Bill will now follow the normal passage through parliament.
The 2021 Finance Bill also legislates for other tax changes, the majority of which having been previously announced and consulted upon, which was then confirmed at the Budget. Over half of the Bill was published in draft for consultation at ‘Legislation days’ in July 2020, November 2020, and in July 2018.
Read the full contents of the 2021 Finance Bill.