budget 2021

Budget 2021: The Financial Planning Perspective



Posted on: 9th March 2021

Following last week’s 2021 budget provided by the Chancellor of the Exchequer, Rishi Sunak, the British public are provided with ongoing interventions within the housing market through the stamp duty land tax threshold being brought back to its £125k limit gradually until the autumn, the ongoing furlough scheme seeing an extension until the month of September and the freezing of personal tax allowances from April 2022 onwards.

For those struggling with all of the numbers, Haven IFA provides you with the following breakdown from the 2021 budget line up.

Income Tax

The tax-free personal allowance will see an increase in the figure of £12,570 from £12,500 and the threshold for higher rate tax will increase to £50,270 from its current £50,000.

What this means is that while taxpayers may pay less tax in 2021/22, subsequent increases in pay and inflation over the following years means the freeze until 2026 brings in an expected extra £19.3bn to public coffers within a five year period.

Summary: Increased from April 2021, frozen until 2026.


Those seeking pension advice in Manchester are keen to know the effects of the budget.

The current thresholds for Lifetime Allowance (£1,073,100), Annual Allowance (100% of earnings/£40,000 – Whichever is lower) and the MPAA (£4K) are currently frozen at existing levels via freezing the Lifetime Allowance. The Lifetime Allowance is the level of total pensions can attain prior to additional tax charges. This move is expected to provide an additional £990 mn to the Treasury around 2025/26.

Summary: Lifetime, Annual, MPAA all frozen at the existing level.


Thresholds for annual exemptions prior to Capital Gains Tax becoming liable remains at its figure of £12,300. Also, both annual allowances for ISA contributions and Junior ISAs have been kept at their respective figures of £20k and £9k.

Also announced was the administering of a new green bond to enable savers to invest in greener, environmentally beneficial projects whilst earning interest. There has been some initial scepticism over the bond’s success and its return amount considering the administer’s (NS&I) current interest rate of 0.01% of income bonds.

Final Thoughts

Unless your business earning profits are over £250k then the writing on the wall is that your tax bill will increase in the next two years. With hidden tax rises all throughout this budget, regular Joe and Jane Bloggs were presented with a scenario of not getting any extra and not having anything taken either with a goal to keep everything as is.

Many commentators are pointing to it as a stealth tax unless income remains completely stagnant all the way to 2026.

Naturally, this provides areas of uncertainty and concern among those unawares, which is why at Haven IFA, we work to be the best independent financial advisers in the UK in financial planning and tax mitigation through pensions, VCTs, ISAs and every other avenue to provide a secure position for your income and savings, keeping a clear goal on your future plans and retirement planning in Cheshire.

Call the team at Haven IFA today to keep your finances in your pocket and out of HMRC’s.