AUTUMN BUDGET 2021

Posted on October 28, 2021

Chancellor Rishi Sunak delivered a Budget that looks to help the economy recover following the pandemic.

The key announcements were as follows:-

  • The corporation tax main rate will increase from 19% to 25% from 1 April 2023 for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief
  • The £1 million annual investment allowance will be retained until 31 March 2023 when it will then reduce to £200,000
  • New first year capital allowances are introduced for 1 April 2021 to 31 March 2023 for qualifying new not “second hand” or “used” plant and machinery which allow a super deduction of 130%
  • Personal allowance for income tax remains at £12,570 and the higher rate band remains at £50,270 from 6 April 2022 until 5 April 2026
  • Dividend tax rates increase by 1.25% from 6 April 2022
  • National insurance contributions will increase by 1.25% from April 2022. From April 2023, the NIC rates will decrease by 1.25% but there will be a new 1.25% Health and Social Care Levy
  • The Employment Allowance will also be available to utilise against the employers’ liability to the Levy
  • The capital gains tax annual exemption and rates have not been changed and the inheritance tax nil rate band of £325,000 will be frozen until 5 April 2026
  • From April 2023, Research and Development tax reliefs will be reformed by expanding qualifying expenditure to include data and cloud costs
  • For 2022/23 a new temporary business rates relief discount of 50% is introduced in England for eligible retail, hospitality and leisure properties up to a maximum of £110,000
  • The business rates multiplier will be frozen for 2022 to 2023 and there will be three-yearly revaluations from 2023
  • A new business rates relief will be introduced to support investment in property improvements and the Transitional Relief and the Supporting Small Business Scheme is extended for 2022 to 2023
  • For disposals of UK residential property from 27 October 2021, there is an extension for the reporting and payment deadline from 30 days to 60 days
  • Businesses selling goods within freezones can zero-rate their supplies
  • For accounting periods starting on or after 1 April 2022, the new late submission and late payment penalties for VAT come into effect
  • From April 2022, the National Living Wage for individuals 23 years old and over will increase to £9.50 per hour
  • Making Tax Digital regime for income tax for sole trader businesses and landlords with business income over £10,000 per annum is being deferred from 6 April 2023 to 6 April 2024
  • From 6 April 2024 accounting profits for unincorporated businesses will be apportioned into the tax years in which they relate
  • The normal minimum pension age will rise from 55 to 57 from April 2028
  • From April 2022 the rules will change for certain pension schemes under some circumstances regarding the mandatory Scheme Pays and will apply retrospectively from 6 April 2016
  • The Annual Tax on Enveloped Dwellings annual charges will rise by 3.1% from 1 April 2022

Download your full copy of the Budget booklet here.

If you would like to discuss any of the issues raised by the Budget, please do contact us.

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