The Autumn Budget 2021 Tax Breakdown

We’re sure you’ve seen by now Rishi Sunak’s autumn Budget was announced earlier this week. With so much information to process, it can be difficult to know exactly what will be affecting you and your business, so we’ve broken down the most important tax-related information for you.

Rates and R&D – England

Business Rates:

• £4.6bn more in business rates concessions, accompanied by a Budget consultation document.
• The business rates multiplier will be frozen at 49.9p and 51.2p for a second year from 1 April 2022 until 31 March 2023.
  
  R&D Tax Credits:
• Following our exit from the EU, R&D tax relief is now limited to work only undertaken in the UK.
• The list of eligible expenditures for R&D will include data and cloud computing costs, although it is not clear at this point how they will be defined for these purposes.

Allowances

• The temporary £1 million annual investment allowance (AIA) will be extended until April 2023.
• Several new capital allowance measures were introduced, such as for new and unused plant or machinery. This includes a 130% super deduction scheme for main pool plant and machinery, and a 50% SR allowance for special rate assets. You can check out what other allowances were introduced here.

Alcohol Duty

• Duty rates on beer, cider, wine and spirits will be frozen for the next 12 months
• 4 new tax bands will be implemented around alcohol by volume (ABV) ratings
• There will be a new small producer relief for small & artisanal alcohol produces with an ABV below 8.5% 
• As well as a 5% cut in duty for draft beer and cider kegs of 40L or more, to support the pubs in our communities and encourage consumers to go out as opposed to drink at home.

Fuel Duty

• Fuel duty will also be frozen for the next 12 months

Air Passenger Duty

• A new APD will be introduced of £6.50 per flight on routes between England, Scotland, Wales and North Ireland
• 3 new bands will be introduced to cover international travel further afield, with 0-2000 miles from London at £13, 2000 – 5500 at £87 and 5500+ at £91.

Residential Property Developer Tax

• The Residential Property Developer Tax (RPDT) that was announced earlier this year will come into effect from April 2022. An additional 4% of corporation tax will be charged on the profits of companies that earn more than £25 million from UK residential property development. 

Tonnage Tax

• Tonnage Tax reforms will reward shipping companies for being registered in the UK and flying the Red Ensign. They will simplify flagging rules and conditions covering the treatment of dividends and other distributions of overseas shipping companies. 

Corporate Tax

• The Bank Levy, an additional 8% tax on bank profits, will be reduced to 3% from 2023, to coincide with the increase of corporate tax from 19% to 25%.

 Cross Border Group Relief

• From the 27th October 2021, cross border group relief claims, for UK companies that incurred losses in the EEA, will no longer be possible.

Creative Sector Relief

• There will be changes to several creative tax reliefs, including Theatre (TTR), Orchestra (OTR) and Museums and Galleries (MGETR), varying from 45% – 50%, from the 27th October 2021.

Capital Gains Tax Reporting

• For disposals of UK residential prop​​erty that complete on or after the 27th October 2021, the reporting and payment deadline will be 60 days after the completion date.

National Insurance Contributions

• Several thresholds are increased in line with the CPI rise to 3.1%. The lower earnings limit is set to £123 per week, the primary threshold is set to £190 per week and the secondary threshold is set to £175 per week.
• A secondary threshold will be introduced set at £481 per week for Freeport employees working for an employer with physical premises in a Freeport Tax Site. This will apply from the 6th April 2022. The first Freeport Tax Sites announced so far are Humber, Teesside and Thames.
• Pending the introduction of the Health and Social Care Levy from the 6th April 2022, the rates of Class 1, 1A and 1B contributions are increased by 1.25% for 2022/23. As far as employers are concerned, the rate of secondary Class 1 contributions, Class 1A contributions and Class 1B contributions is 15.05% for 2022/23.
  
  Read more about next year’s changes to National Insurance here. 

Pensions

• The Finance Bill 2021-22 will include provisions to raise the age at which benefits can first be taken from pension schemes without incurring payment charges, from 55 to 57. This will have effect from the 6th of April 2028.

There were surprisingly few changes made to tax and business related finances in the Autumn Budget and Spending Review 2021, which may come as a relief to those who do not want to deal with the constant changes. There were also a surprising lack of green tax measures, which we expected to see more of ahead of COP26.

You can read the full report here. 

As always, we are here to help anyone who might be confused and requires help with any changes.

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