Spring Budget 2021: What it means for holiday home owners

We have put together a summary of the Spring Budget 2021 announced by the Chancellor this week and what it means for existing holiday home owners as well as those looking to make an investment.

Stamp Duty Land Tax (SDLT): The temporary increase in the residential SDLT Nil Rate Band to £500,000 has been extended to 30 June 2021.  From 1 July, the Nil Rate Band will reduce to £250,000 and return to £125,000 on 1 October 2021.  You’ll usually have to pay 3% on top of SDLT rates if buying a new residential property means you’ll own more than one.

Business Rates: The government will continue to provide eligible retail, hospitality, and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 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 30 September followed by an interim rate of 12.5% until April 2022.  Those on the flat rate scheme will continue to benefit from the 0% rate until 30 September, followed by an interim rate of 5.5% before returning to 10.5% in April 2022.

Corporation Tax: From April 2023 the rate will rise to 25% on profits from the current 19%. Small profits rate of 19% continues for earnings below £50,000. 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: Thresholds 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: The government will provide ‘Restart Grants’ in England up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.  Details on eligibility criteria have yet to be announced.  Further discretionary grant funding will be provided to local authorities.

130% Super Deduction: From 1 April 2021 until 31 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.