Autumn Budget 2021

On 27 Oct the Chancellor Rishi Sunak presented his autumn 2021 budget. We’ve summarised some of the key points below:

Tax

Autumn Budget: Personal Tax

Dividends

The dividend allowance remains unchanged at 0% chargeable to tax at the first £2000 of dividends.

Tax for dividends received above £2000 is increasing by 1.25% from 6 April 22:

 

(changes announced Sep 21)              2021-2022              From 6 April 2022

Basic rate taxpayers                                           7.5%                                  8.75%

Higher rate taxpayers                                        32.5%                               33.75%

Additional rate taxpayers                                 38.1%                               39.35%

 

Reminder: NIC and the Health and Social Care Levy

Image of family

Class 1 and 4 NIC will be increased temporarily by 1.25% from April 2022 and then replaced with the new HSCL from April 2023. The HSCL will be extended to people who are still working but above the state pension age.

 

CGT – Property Disposals (typically excludes properties to which PPR applies)

The reporting and payment deadline has been extended to 60 days following completion for residential property for UK and non-UK residents.


Autumn Budget: Employment

National Living Wage (NLW) and National Living Minimum Wage (NLMW)

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The NLW and NLMW hourly rates are increasing from 1 Apr 2022. For those aged 23 and older the new minimum will be £9.50.

 

 

 

 

From 1 April 2022, the hourly rates of NLW and NLMW will be:

Aged 23 and over   £9.50

Aged 21-22              £9.18

Aged 18-20              £6.83

Aged 16-17               £4.81


Autumn Budget: Business

Accounting Periods not aligned to tax years

From 2024/25 onwards there will be a new fiscal ‘tax year basis’ for assessing trade income of unincorporated businesses (using profits of 6 April 2024 to 5 April 2025).

Affected self-employed individuals and partnerships may keep their existing accounting period but the trade profit or loss that they report to HMRC for a tax year will become the profit or loss arising in the tax year itself, regardless of the chosen accounting date. This will require apportionment of accounting profits into the tax years in which they arise.

Business Rates

Existing system to continue but with improvements.

  • From April 2022 -the multiplier used for calculating business rates will be frozen for a second year
  • From April 2022 for one year –50% business rates relief for retail, hospitality and leisure –capped at £110,000 (business rather than property). This includes additional businesses such as hotels, gyms and bowling alleys.
  • Starting from April 2023 -UK Government will be moving to three year valuations from five (or more) years.
  • From April 2023 –one year rates holiday for building improvements.
  • From April 2023 -business rates reliefs for green energy (e.g. solar panels).

Capital Allowances

The £1million annual investment allowance (AIA) on plant and machinery for most incorporated and unincorporated businesses has been extended to 31 Mar 23.

Corporation Tax rates

2023 going up to 25% 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 £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate.

MTD ITSA –Regulations laid 23 September 2021

Pre-announced 1 year deferral of MTD ITSA to start 6 April 2024 (partnerships in 2025).

Making Tax Digital

 

 

 

 

 

All businesses will:

  • keep records using ‘functional compatible software’
  • Make reports quarterly to the same calendar quarters
  • Quarter to 5 July will be due 5 August
  • Quarter to 5 October be due 5 November
  • Quarter to 5 January be due 5 February
  • Quarter to 5 April be due 5 May.

New penalties begin for MTD ITSA from 6 April 2024 and 6 April 2025 for all other ITSA taxpayers.

MTD VAT

Digital record keeping and quarterly reporting begin for businesses voluntarily registered for VAT from 1 April 2022.

VAT laptop

New penalty rules for late filing and late payment begin for first accounting period starting on/after 1 April 2022 to replace the old default surcharge rules.

 

R&D Relief Reform

From April 2023, R&D expenditure allowance will be extended to include data and cloud computing costs. From April 2023 R&D tax relief is to UK-based activity only, cross-border loss relief is abolished from 27 Oct 21.


Autumn Budget: Other matters

Alcohol duty

Alcohol duty

The UK’s main duty rates on alcohol are being simplified from 15 to six bands, with the approach basing the scale from low to high based on the increasing alcohol strength of the drinks.

Pubs and bars will also receive a new relief with a cut on duty for draft beer and cider sold in pubs.

 Consultation – Online Sales Tax

Shopping onlineThe Government will publish a consultation on the pros and cons of this to try and level up between bricks and mortar retailers and etailers. This review is still in the early stages.

 

 


For further in-depth information about the autumn 2021 budget please visit the gov.uk website.


For more resources created by Team SAS to support your business please click here

If you need advice and would like to discuss any of the points in this article please get in touch (call tel:0118 911 3777 or email info@teamsas.co.uk

 

Disclaimer: This summary is provided as a guide only and we recommend seeking professional accounting advice before making decisions. Use of this guide is for reference only. Specialist Accounting Solutions Ltd accepts no liability for any errors therein or any losses or damages arising from it.

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