What Do Investors Need to Know About the Budget?

Budget 2021: Everything's frozen - Isa allowances, pension lifetime allowances, CGT - but savers may be tempted by the new green bond, while housebuilder shares are on the up

James Gard 3 March, 2021 | 3:05PM
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Rishi Sunak Chancellor

The 2021 Budget contained much more detail relating to personal finance and investing than last year’s, much of which had been heavily trailed in the run-up to the speech by Chancellor Rishi Sunak. But there were some unexpected announcements and some – such as the expected rise in Capital Gains Tax – that did not materialise. Here’s what investors need to know:

The Big Freeze

Faced with a substantial bill for supporting the economy through the pandemic, the public had been braced for income and other tax rises. But freezing a range of allowances was the key theme of this Budget, meaning tax bands and allowances won’t keep up with rising inflation for five years. The Chancellor also confirmed that increases slated for this year will go ahead, including the raising of the higher-rate tax band to £50,000 and the personal allowance to £12,500. Investors could consider this a let-off, says Darius McDermott: managing director of Chelsea Financial Services. “Personal allowances have been frozen, which many will call a stealth tax – as time goes on, we will all pay little more. But given some allowances have almost doubled in the past decade, I think we have been spared far worse.”

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About Author

James Gard  is content editor for Morningstar.co.uk