AUTUMN BUDGET 2021
Rishi Sunak delivered his third Budget as Chancellor on 27 October 2021. This year it was combined with the Spending Review for Government Departments and that spending element did take up the bulk of the speech which was light on new tax measures. The Chancellor certainly enjoyed announcing lots of spending in various areas. Concerns will be at the potential future tax rises to pay for all of this, particularly if the growth forecasts are missed.
The Chancellor was keen to promote investment by businesses to encourage growth, all of this against the backdrop of a grim picture of the UK’s public finances .
Economic growth forecasts were given and revised upwards from those given in March 2021. Growth in 2021 is expected to be 6.5 %, in 2022 6%, 2023 2.1%, 2024 1.3% and in 2025 1.6%.
One brand new tax was announced, the Residential Property Developers Tax (RPDT). This applies to residential property developers with profits above £25M per annum, at 4% (this in addition to Corporation Tax). This new tax starts in April 2022.
There were welcome extensions announced to the tax reliefs in creative industries.
R&D tax reform was announced which will give greater deductions for expenditure in the UK, rather than spend overseas, for qualifying businesses.
Alcohol duty is being significantly reformed with the higher the strength of alcohol in the product the higher the rate of duty.
There were some rather odd policy announcements in the week before the COP26 summit – to reduce Air Passenger Duty on domestic Short Haul flights and the fuel duty freeze
You can download our detailed Budget Booklet at the end of this article. Our main ‘take-aways’ from the Budget are:
Personal taxes
There was little announced on personal tax. We already know that for income tax the personal allowance is frozen at £12,570 for the next two tax years as is the point at which Higher rate tax starts to be paid £50,270.
The government had already announced a new tax, The Health and Social Care Levy, a few weeks ago. This adds 1.25% to NI for employees, employers and the self employed from April 2022.
VAT
There were no significant VAT changes announced in this Budget
Corporation tax
There was little said about Corporation Tax so the status quo remains. Corporation Tax stays at 19% for the moment and will until 31 March 2023.
Announced back in March 2021 were increase to Corporation Tax. From 1 April 2023 this will increase to 25% for profits above £250,000. For profits under £50,000 they will continue to be taxed at 19% with tapering for profits between £50,000 up to £250,000.
The effective corporation tax rates from 1 April 2023 are, therefore:
| Profits | Effective tax rate in band |
|---|---|
| Up To £50,000 | 19% |
| £50,000 - £250,000 | 26.5% |
| Over £250,000 | 25% |
Business Taxes
The £1m of Annual Investment Allowance for companies has been extended to March 2023 (this was originally due to end on 31 December 2021).
Business Rates
Business rates on premises will now have their rateable value reviewed every 3 years. Hospitality, Leisure and Retail businesses will get a 50% discount on their rates bills.
The business rate multiplier increase for 2020 has been cancelled altogether.
Stamp Duty Land Tax
There were no significant changes to SDLT in this Budget.
Property taxes
There were no changes to any of the taxation elements applying to property investors bar the change mentioned above to introduce the Residential Property Developers Tax.
If you have any questions based upon anything in the Budget please do not hesitate to contact us.
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