Autumn
Budget 2021
The Chancellor presented his Autumn Budget and Spending Review to Parliament on Wednesday 27 October 2021. There are a few announcements to bring to your attention:
Annual investment allowance extended
The government will extend the temporary £1m level of the Annual Investment Allowance (AIA) to 31 March 2023. It was due to expire at the end of 2021.
This means that businesses can claim full tax relief on many assets purchased up to a combined value of £1m in a year.
National living & minimum wage
The National Living Wage is being increased to £9.50 per hour from April 2022.
The National Minimum Wage for people aged 21-22 will rise from £8.36 to £9.18 an hour, and the Apprentice Rate will increase from £4.30 to £4.81 an hour.
Recovery loan scheme extended
The Recovery Loan Scheme will be extended until 30 June 2022. Finance will be available up to a maximum of £2 million per business. The government guarantee will be reduced from 80% to 70% to encourage the lending market to move towards normality as the economy continues to recover.
Research and development (R&D) tax relief
Qualifying expenditure for R&D tax credits will include cloud computing and data costs from April 2023, meaning that there’s more some businesses can claim for.
60-day capital gains tax payment window
The 30-day capital gains tax (CGT) payment window will be extended to 60 days from 27 October 2021. This is the deadline for residents to report and pay CGT after selling UK residential property.
When mixed-use property is disposed of by UK residents, legislation will also clarify that the 60-day payment window will only apply to the residential element of the property gain.
A reminder on the following, that were reported prior to the government’s budget announcement:
Health and social care levy
This is a new tax to pay for social care costs. National Insurance contributions and tax on dividends will increase by 1.25% from April 2022. The National Insurance increase will apply to employers, the employed, and the self-employed.
From April 2022, the new tax will be captured under National Insurance. From April 2023 onwards, a new ‘Health and Social Care Levy’ will be introduced and displayed on payslips as a separate line item.
Dividend rate rises by 1.25%
The rates for dividend tax have been confirmed for April 2022 to fund the social care levy. This measure increases the rates of income tax payable on dividend income by 1.25%.
The ordinary rate will be set at 8.75%
The upper rate will be 33.75%
The additional rate will be 39.35%
The dividend allowance for individuals will remain at £2,000
