As before, we won’t cover everything the Chancellor announced in the latest Autumn Budget 2021, but we wanted to give you some of the salient highlights:
Personal Tax and Allowances:
- Personal Allowance – will remain at £12,570 until 2025/26 – in reality this means a reduction over time, as the cost of living increases, as we stated in our blog earlier this year
- Tax bands remain largely unchanged, although there is a reduction in personal allowance over £100,000 – £1 for every £2 of income, and therefore no personal allowance when the adjusted net income exceeds £125,140
- Tax on dividends has increased with effect from April 2022. The first £2,000 remains tax free. Over that amount the rates will be:
- 8.75% for basic rate taxpayers
- 33.75% for higher rate
- 39.35% for additional rate
- National Insurance will be accompanied by a Health and Social Care Levy specifically to support Government spending on health and social care. This will be charged at 1.2% and will commence in April 2023, at the same time as NIC rates are reduced back to 2021/22 levels.
- National Living Wage for adults aged 23 years and over will increase by 6.6% with effect from April 2022 to £9.50 per hour. The National Minimum Wage for those under 23 has also increased. You can see the full list of rates here – Government Minimum Wage Allowances 2022.
- Increase in the normal minimum age you can access your pension savings from 55 to 57 with effect from April 2028. This will affect people born after 5 April 1973
Other Domestic Implications:
- Alcohol duty is currently unchanged, but the Chancellor has announced planned reform for alcohol which will come into effect in 2023. It includes a reduction in duty for sparkling wine and draught beer, while there will be an increase in drinks with alcohol content over 11%.
- Tobacco duty increased by 2% over the RPI inflation rate with effect from 27 October 2021
- Fuel duty remains unchanged
- Air Passenger Duty – a new lower rate will be introduced for all UK domestic flights, while an additional rate will be brought in for long haul flights. These will come into effect in April 2023.
- Stamp Duty – this was re-introduced at the previous level of £125,000 with effect from 1 October – no change since the last budget
Once again, there has been a big focus on business, which given the challenges of the last 18 months, is not surprising.
- Making Tax Digital – it was expected that sole traders and partnerships were going to be mandated to adopt digital income tax reporting by 2023, but this has now been delayed until April 2024.
- Corporation Tax – no changes to the increases announced in the Spring.
- Capital – the allowance for plant and machinery was due to reduce back to the previous limit of £200,000 but the current limit of £1million has been retained until March 2023
- Business rates – all eligible businesses operating in retail, leisure and hospitality will enjoy a rate reduction of at least 50% up to March 2023
- Business premise valuations – this will be completed every three years from March 2023 to make the rates fairer
- Additional allowances for investment in property improvements and green initiatives have been introduced
This is very much a whistle stop tour of the Budget, with plenty of detail and opinion on the various aspects and changes announced available online.
If you would like specific advice about how these changes will affect you, please contact us on 01344 875 310.