Autumn 2021 Budget Highlights

Few surprises in the Autumn Budget

Once again, this appeared to be a very uneventful Budget – with many changes having already been announced over the past 12 months. Despite earlier predictions, there were no amendments made to Capital Taxes legislation such as increasing Capital Gains Tax rates or adjustments to taper relief for PETs under Inheritance Tax. It is a difficult time to raise taxes yet further: the country is still recovering from the impact of the Coronavirus pandemic, with cases rising as we head into Winter, coupled with significant increases expected in the cost of living over the next twelve months.

Below, we have highlighted a few key items announced in the Autumn Budget that might be of particular interest to many of our clients. If you do have any questions about how these changes might affect you and your business, please get in touch with the DRG team.

Tax rates on Dividends and National Insurance increasing

Firstly, as already announced earlier in the year, the tax rates on dividends and National Insurance will be increasing by 1.25% from 6 April 2022.  The increase of National Insurance will then be replaced by the Health and Social Care Levy of 1.25% from 6 April 2023.  These changes will affect all employees and owner managed businesses with profits extracted via dividends and salary as the 1.25% increase will affect everyone.  
 

Reporting of CGT on residential properties increased 

Another change to affect individuals is the adjustment to the reporting of Capital Gains Tax on residential property.  Since 6 April 2021, you have had just 30 days to report and pay any Capital Gains arising on the sale of residential property.  This has now increased to 60 days for sales completing on or after 27 October 2021, giving you a chance to get your affairs in order and minimise the risk of late filing and payment penalties. 
 

Postponement of MTD for self-employed or landlords to April 2024

For those of you who are self-employed or landlords, Mr Sunak also announced the postponement of Making Tax Digital (MTD) for income tax on those with income in excess of £10,000 from 6 April 2023 to 6 April 2024.  Again, this is a positive announcement, giving you more time to get your affairs in order.  General partnerships will not be required to comply with MTD until 6 April 2025.  
 

R&D tax relief now includes data and cloud costs

With regards to Corporation Tax, the Annual Investment Allowance (AIA) of £1million will remain in place until 31 March 2023, encouraging you to invest in your business.  Research and development has also seen a change, where qualifying expenditure will include data and cloud costs from April 2023, which are currently non qualifying expenditure.  This should increase the relief available for many of our clients who make R&D claims.

If you would like to discuss the impact of the Autumn 2021 Budget on you and your business, please get in touch with the team at DRG Chartered Accountants. We would be very pleased to hear from you.