In addition to business, personal and capital taxes, and employment policy updates, a number of other important updates were announced by Chancellor Rishi Sunak as part of the 2021 Budget. You can read all about these here.
Land and buildings transaction taxes
Land and buildings transaction taxes are devolved to Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax). Stamp Duty Land Tax (SDLT) applies to transactions in England and Northern Ireland.
All these taxes have had a temporary increase in the nil rate threshold for residential properties. The thresholds were set to return to the previous thresholds from 1 April 2021.
Budget announcement
The government will extend the temporary increase to the SDLT nil rate band for residential property in England and Northern Ireland to 30 June 2021. From 1 July 2021 until 30 September 2021, the nil rate band will be £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021.
SDLT surcharge
New SDLT rates are proposed for purchasers of residential property in England and Northern Ireland who are not resident in the UK. The new rates will be 2% higher than those that apply to purchases made by UK residents, and will apply to purchases of both freehold and leasehold property as well as increasing SDLT payable on rents on the grant of a new lease.
The surcharge will apply to land transactions with an effective date of 1 April 2021 or later. Transitional rules may apply to some contracts exchanged before 11 March 2020 but completed or are substantially performed on or after 1 April 2021, or some contracts substantially performed on or before 31 March 2021 but not completed until 1 April 2021 or later.
Reform of penalties for late submission and late payment of tax
The government will 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 new late payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is.
These reforms will come into effect: for VAT taxpayers, from periods starting on or after 1 April 2022; for taxpayers in ITSA with business or property income over £10,000 per year, from accounting periods beginning on or after 6 April 2023; and for all other taxpayers in ITSA, from accounting periods beginning on or after 6 April 2024.
Speak to Shorts today for tailored advice
If you would like further information on how the various measures announced in the 2021 Budget may impact you, your business or your finances, get in touch with Shorts today.
Read more about the 2021 Budget
Shorts is dedicated to bringing you the most relevant budget analysis with detail and clarity. For more information on each of the key areas of the 2021 Budget, you can explore our other blogs below.
Scott Burkinshaw
Scott is Tax Partner at Shorts, specialising in providing strategic corporate and personal tax advice.
View my articlesTags: Budget 2021
