The 2021 Autumn Budget was the first in 3 years. To our relief, we were able to hear a budget that positioned the pandemic behind us and a new age of optimism for the country and how the Tory Government sees the near future ahead.
We were fearing significant tax hikes in different areas of tax legislation that would attempt to recover some of the heavy investment made by the Government to see the country through the pandemic. However, previous tax increases announced such as Corporation Tax moving to a progressive rate increase up to 25% coupled with helpful borrowing data allowed the Government not to issue any more unwelcome news.
Below are some of the budget highlights:
- From 27 October 2021, the deadline for reporting and paying CGT after selling UK residential property will increase from 30 days to 60 days after completion.
- Businesses will benefit from several changes to the business rates regime, including freezing of business rates multipliers for a second year from 1 April 2022 to 31 March 2023.
- Income tax basis periods will be reformed so hat a business’s profit for a tax year will be the profit arising in the tax year itself, regardless of accounting date.
- Research and Development will be enhanced to include data and cloud costs as part of qualifying expenditure.
- Alcohol duty will be restructured so that all beverages will be taxed in direct proportion to their alcohol content.
- Domestic air passenger duty will be reduced to stimulate and promote activity for travel within the UK.
- Universal Credit tapering rate will reduce from 63% to 55% meaning claimants will keep 8p for every £1 of net income earned.
- The National Living Wage is set to rise up to £9.50/hour for employees aged 23 and above representing a 6.6% increase, a welcomed change for many employees. In addition, national minimum wage is increasing for all ages under 23 at varying rates.
- Tonnage tax reforms have been announced to update the UK shipping industry and to see more firms basing their headquarters in the UK and flying the UK flag.
- Making Tax Digital (MTD) for income tax self assessment (ITSA) has been delayed to 6 April 2024. Any sole trader and landlord with annual income >£10,000 will fall under this significant income tax change but there is now more time to prepare.
If you have any queries on how any of these changes may apply to you directly, please get in touch. This summary has been prepared quickly following the announcements and is for general information only.