Another Budget has come and gone.
Though it was clear that the Chancellor wanted to focus on spending rather than taxing in his announcements, which according to him will prepare the UK economy for a 'new age of optimism' post-Covid; we can't forget the changes impacting small businesses and the self employed that were announced well in advance to this week's official statement.
Among welcomed changes such as the National Living Wage increase, cuts to business rates for specific sectors, and Research & Development tax relief rule amendments, the Budget was a clear indication that rising inflation is just around the corner.
The Office for Budget Responsibility (OBR) warned that "the cost of living could rise at its fastest rate for 30 years".
So, where is the Chancellor investing taxpayer money?
With several announcements being made prior to the Budget including the increases to employment and corporation taxes, Mr. Sunak was keen to demonstrate how government spending would not only help the UK economy recover but thrive.
A Summary of the Autumn Budget Announcements:
Previously announced measures included:
| Health and Social Care Levy | Dividend tax rates |
| Capital Gains Tax | Corporation Tax |
Autumn Budget 2021 announcements:
- Business rates
- Business funding
- Business Recovery Loan Scheme
- R&D tax relief
- Annual Investment Allowance (AIA)
- National Living Wage increase
- Alcohol, Fuel & Air Passenger Duty
- Universal Credit
Health and Social Care Levy
The new Health and Social Care Levy was announced last month and will be introduced in April 2023.
Prior to the start of levy which is a 1.25% tax on employee earnings, National Insurance contributions (NICs) will be increased by 1.25% in April 2022 which will then transition into the new levy.
These increases are applied to both employee and employer contributions.
Dividend tax rates
A second measure previously announced was the rise to dividend tax by 1.25% from 6 April 2022.
Income tax band |
Tax rate 2021-22 |
Tax rate 2022-23 |
| Basic rate | 7.5% | 8.75% |
| Higher rate | 32.5% | 33.75% |
| Additional rate | 38.1% | 39.35% |
Capital Gains Tax
The deadline for reporting and paying Capital Gains Tax after selling UK residential property will increase from 30 days to 60 days after completion, this was made effective immediately from 27 October 2021.
The deadline was also increased to the same terms for non-UK residents disposing of property in the UK.
Corporation Tax
In the Spring Budget 2021, we were previously informed that Corporation Tax is set to increase from April 2023, no further changes were announced.
- The rate of corporation tax for profits over £250,000* will increase to 25%
- The rate of corporation tax for profit up to £50,000* will remain at 19%
*These limits are reduced where multiple companies are associated, please speak with your advisor for more information.
Business rates cut
For businesses in the retail, hospitality and leisure sectors the Chancellor announced a 50% cut in business rates in 2022/23.
Also, starting in 2023 businesses making eligible improvements to their property will not face higher business rate bills for the 12 months following improvements.
From April 2022 there will be a new temporary £1.7 billion of business rates relief helping up to 400,000 retail, hospitality and leisure properties. These have been some of the hardest hit sectors throughout the pandemic.
Business Funding
The Chancellor announced a number of initiatives to help small businesses with funding:
- The Start-up Loans scheme - the government will provide new funding for 33,000 loans under this programme
- £1.6bn commitment for the British Business Bank to provide further investment funds
- An additional £150m in funding over three years for the Regional Angels programme
- The launch of a £1.4bn 'Global Britain' investment fund to attract oversees investment to the UK
- The UK Prosperity Fund beginning in April 2022
Business Recovery Loan Scheme
The Business Recovery Loan scheme has been extended for a further six months to 30th June 2022.
R&D Tax Relief
The Chancellor announced two key changes to the Research and Development tax relief system which included:
- The inclusion of data and cloud computing in qualifying expenditure
- The introduction of relief limitations for R&D activities performed outside of the UK
Annual Investment Allowance (AIA)
The Annual Investment Allowance will remain at £1 million until 31 March 2023.
National Living Wage increase
The National Living Wage will raise to £9.50 an hour, an increase of 6.6% for employees. This will start on 1 April 2022.
Apprentices and young people will also see increases in the National Minimum Wage rates.
Alcohol, Fuel and Air Passenger duty
Alcohol duty
Drinks will be taxed according to their alcohol content, with higher strength products incurring proportionately more duty with a standardised set of bands and reduced rates for products below 3.5% ABV.
Fuel Duty
With people across the UK struggling with the highest increase to petrol in eight years, a planned rise in fuel duty was cancelled.
Air Passenger Duty
A new domestic band for air passenger duty for 2023 will be set at £6.50 for flights between airports in England, Scotland, Wales and Northern Ireland (excluding private jets).
Universal Credit
The taper rate on Universal Credit will be cut from 63% to 55% by no later than 1 December.
Don't forget that more news on the announcements will continue to develop and this is a merely a guide to some of the main points initially discussed.
We recommend seeking further consultation on any questions you may have regarding the Autumn Budget 2021 and encourage you to get in touch with our team.
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