Autumn Budget 2021 Update

October 27th, 2021 | Posted in Small Business, Tax Planning

2021 Budget Despite the many media predictions, there were no significant tax increases announced the Autumn Budget. Instead, there were a few cuts in various duties, some of which were made possible as a result of the UK leaving the EU and having more autonomy over domestic tax and duty rates. Rishi Sunak’s closing remarks in the Budget proudly referred to the many tax cuts announced; easy to do considering the most significant tax increase in a long time – the Health and Social Care Levy – had already been announced prior to the Budget in early September! Below is a summary of some of the other more significant announcements made in the Autumn Budget.

Business Rates

A new temporary 50% business rates discount for the hospitality, retail and leisure sector will apply in 2022-23, subject to a £110,000 per business cap. The business rates multiplier will  be frozen in 2022-23.

Further business rates changes will apply as follows from April 2023:

  • More frequent business rates revaluations – every 3 years instead of the current 5 years.
  • A new Investment relief for plant and machinery purchased to adopt green technology, e.g., solar panels.
  • 100% Improvement relief appplicable to businesses investing in property improvements to premises that they occupy and that increase the rateable value of the property.  These will not attract additional business rates for 12 months from the date of investment.

Minimum Wages

From April 2022 the National Living Wage (NLW) applicable to those aged 23 and over rises to £9.50 from the current £8.91, representing a 6.6% increase.  All other National Minimum Wage (NMW) rates will also be increased from 1 April 2022 as follows:

Age Current Rates From 1 April 2022
23 and over £8.91 £9.50
21-22 £8.36 £9.18
18-20 £6.56 £6.83
Under 18 £4.62 £4.81
Apprentice £4.30 £4.81

The government reiterated its commitment to expand the NLW to those aged 21 and over by 2024, economic conditions permitting.

Research and Development Tax Relief

From April 2023 Research and Development (R&D) tax reliefs are being reformed to support modern research methods by expanding qualifying expenditure to include cloud computing and data costs.  Support will also be refocused towards innovation in the UK with R&D tax relief only applying to domestic expenditure.  Currently around half of R&D tax credit claims include foreign spending.  Overall, R&D tax credit relief will be refocused towards innovation in the UK.

Extension of Annual Investment Allowance

The annual investment allowance (AIA) that provides upfront tax relief on capital expenditure had been temporarily increased to £1 million until December 2021; this extension will now continue until 31 March 2023.

Capital Gains Tax

With immediate effect, the deadline for reporting and paying capital gains tax (CGT) after selling UK residential property will increase to 60 days after completion as opposed to the existing 30 day rule.  The deadline will also increase to 60 days for non-residents selling UK residential property.  A welcome relief for both those selling UK residential property and to accountants striving to meet the previously very tight 30 day deadline!

Air Passenger Duty

From April 2023, Air Passenger Duty for domestic flights between England, Scotland, Wales and Northern Ireland will be reduced by 50%.  A new higher duty is being introduced for ultra-long-haul international flights of more than 5,500 miles.

Alcohol Duty

As a benefit to leaving the EU, the UK can now set its own alcohol duty to support responsible drinking and to benefit domestic producers.  The main duty rates will be simplified so that instead of the 15 existing rates, there will now only be 6 and the duty will depend on the alcohol strength.

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