Autumn Budget 2021: At a glance

The UK's Chancellor Rishi Sunak presented his Autumn Budget and Annual Spending Review on 27 October 2021. This is our summary of the key tax announcements that may affect owner-managed businesses and their proprietors.

Income Tax, NICs, claims & reliefs

New announcements:

• Payments made through the Household Support Fund and similar schemes in the devolved administrations to be exempt from Income Tax.
• The NIC's Upper Earnings Limit and Upper Profits Limit are to be maintained at 2021-22 levels.
• Income Tax bands and personal allowances including the marriage and savings allowances remain at 2021-22 levels.
• Small increase to the Blind person's allowance.

As announced in September 2021:

• From 6 April 2022: a temporary 1.25% increase to NIC's.
• From 6 April 2023: a new Health and Social care levy of 1.25%.

 See Autumn Budget 2021: Income Tax, NICs, claims and reliefs

Employers

From April 2022:

• National Living wage to increase to £9.50 per hour.
• Van benefit and fuel benefit charges to increase in line with inflation.
• Legislative amendments will be made to update the official vehicle approval documentation recognised for determining the level of a vehicle’s CO2 emissions.

Further changes

• HM Treasury to be granted powers to make regulations to provide Income Tax and NICs relief on employee expenses/benefits in the event of a disaster or emergency of national significance.
• Legislation to be introduced to make top-up payments directly to low-earning individuals saving in a pension scheme using a Net Pay Arrangement. 

 See Autumn Budget 2021: Employment Taxes

Savings & Dividends

No changes for 2022-23:

• ISA , junior ISA and child trust funds limits remain at £20,000, £9,000 and £9,000.
• The starting rate for savings income limit remains at £5,000.

As announced in September 2021:

From 6 April 2022:

• An increase in Dividend Tax rates of 1.25%. 

See Autumn Budget 2021: Income Tax, NICs, claims and reliefs

Capital Gains Tax

From 27 October 2021:

• The 30-day reporting and payment deadline for disposals of UK residential property is extended to 60 days.

 See Autumn Budget 2021: Capital Gains Tax (CGT)

Inheritance Tax

No changes

• All rates, allowances, reliefs and exemptions remain unchanged. 
• The nil rate band was frozen until 2026 at £325,000 by Finance Act 2021.

Land & Property

From April 2022

• The Annual Tax on Enveloped Dwellings (ATED) will rise by 3.1% in line with inflation for the April 2022-23 chargeable period.
• The rate of the new Residential Property Developer Tax announced in May 2021 is set at 4% and applies to profits exceeding £25 million.
• No changes to Stamp Duty Land Tax (SDLT) rates.

 See Autumn Budget 2021: Land & Property

Corporation Tax 

As previously announced, from 1 April 2023:

• Increase in the rate of CT from 19% to 25%.

New announcements:

From April 2023

• The bank levy is to be reduced from 8% to 3%.

From 27 October 2021

• Cross-border group relief will be abolished for accounting periods ending on or after 27 October 2021, with transitional rules. 
• A consultation announced 'Corporate Re-domiciliation' on companies moving their domicile to the UK.
• A new consultation to be launched for an Online sales tax.

Creative tax reliefs 

• Reliefs for theatres, museums and galleries extended by two years to 31 March 2024.

For expenditure from 27 October 2021

• Rate of relief to double until 31 March 2023 when it will reduce, then revert to current rates from April 2024.

R&D tax relief

From April 2023

• The scope of the relief is to be expanded to include cloud computing and data costs.
• Other reforms to refocus support towards innovation in the UK and to target abuse and improve compliance.

See Autumn Budget 2021: Corporation Tax

Capital Allowances

• The £1 million Annual Investment Allowance (AIA) limit is extended to 31 March 2023. 
• Legislation for vehicle emissions to be amended to reflect the new comprehensive vehicle type approval scheme due to be introduced in 2022.
• Finance Bill 22 to confirm the Worldwide Harmonised Light Vehicle Test Procedure CO₂ emissions figure will apply for capital allowance purposes.

See Autumn Budget 2021: Capital Allowances

VAT

Backdated to 1 January 2021:

• An extension to the VAT exemption on dental prostheses to imports by dentists.

Ongoing:

• Extending the margin scheme for VAT in Northern Ireland for second-hand motor vehicles sourced from Great Britain. 
• A new consultation to be opened on the Simplification of VAT treatment of fund management fees.
• Finance Bill 22 will introduce additional elements to the VAT-free zone model for Freeports.

 See Autumn Budget 2021: VAT

Tax Administration & Penalties

New announcements:

• New legislation in Finance Bill 22 to establish an Economic Crime (Anti-Money Laundering) Levy.
• Finance Bill 22 to confirm HMRC's right to use its discovery powers to recover tax charges such as the High-Income Child Benefit Charge, Gift Aid Donations and certain pension charges, with retrospective effect.

As already announced:

• Making Tax Digital (MTD) for Income Tax delayed until April 2024.
• Finance Bill 22 to include provisions to simplify the basis period rules for the self-employed and partners from April 2024. 
• A new requirement for large businesses to notify HMRC when they take a tax position in their returns for VAT, Corporation Tax, or Income Tax (including PAYE) that is uncertain.

Tax Penalties

As already announced:

• New penalties for the late submission and late payment of tax for Income Tax Self Assessment (ITSA) from 6 April 2024 for taxpayers in ITSA in MTD, and 6 April 2025 for all other ITSA taxpayers.

See Autumn Budget 2021: Tax penalties & compliance

Review of business rates

• Following the 2020 Business rates consultation, there are to be more frequent revaluations every three years from 2023.
• The business rates multiplier will be frozen in 2022-23.
• A new business rates investment relief for green technology and for improving the business property.
• Additional 50% discount for 2022-23 for the hospitality and leisure sector.

Misc reliefs and taxes

• A new Small Producer Relief as an extension of Small Brewers relief to apply to cider. No start date has yet been announced for this.
• A new 'Draft relief' to apply to draft beer and cider from February 2023.
• From April  2022, Tonnage Tax to be changed to reward companies for adopting the UK merchant shipping Red Ensign flag.
• Air Passenger Duty (APD): a lower rate of APD to be introduced for UK domestic flights from April 2023. Higher rates to be introduced for long haul flights to capitals over 5,500 miles from London.
• Landfill Tax: a new standard and lower rates in line with RPI from 1 April 2023.
• Aggregates Levy rate remains unchanged.
• Gaming duty banding to be raised in line with inflation from April 2022.
• There will be changes to restrictions to rebated diesel and biofuels from April 2022.
• Technical changes will be made to the Plastic Packaging Tax legislation to reflect policy intent.

Duties

• Planned duty increases on spirits cancelled and sparkling wine duty reduced to match that for still wines.
• Planned rises to fuel duty scrapped.
• Vehicle Excise Duty (VED) to be increased in line with RPI from April 2022, except for Heavy Goods Vehicles (HGV) where it will be frozen until August 2023.
• Tobacco duty to be increased from 6pm on  27 October 2021 by inflation plus two per cent on all products and four per cent on rolling tobacco. Tougher sanctions to be introduced to deal with tobacco duty evasion in Finance Bill 22. 

Benefits 

• Universal Credit taper to be cut by 8% by no later than 1 December 2021.

External sources

Autumn Budget 2021