AUTUMN BUDGET UPDATE 2021
Now that the dust has settled and we have been able to review more of the details, here are some of the headline points to forward from the budget at the end of October...
Income Tax Rates and allowances for 2022/23
From 6 April 2022 to 5 April 2026 the personal allowance will increase to £12,570 and the higher rate threshold at £50,270.
National insurance Class 4 limits
The National Insurance rates will rise by 1.25% from 6 April 2022, however from April 2023 the rates will revert to their previous levels and a new 1.25% Health and Social Care Levy will apply to employers, employees and the self employed (including those above State pension age).
The table below shows the changes for the next 2 years:
Capital Gains Tax
The capital gains tax annual exempt amount will remain at £12,300 for the tax year ended 5 April 2023.
Capital Gains Tax payment window
From 27 October 2021 the deadline for UK residents to report and pay CGT after selling a UK residential property will increase from 30 days to 60 days.
For non UK residents disposing of property in the UK the deadline will also increase from 30 days to 60 days.
Inheritance Tax
Inheritance tax thresholds and rates are unchanged. The nil rate band will remain at £325,000 for the 2022/2023 tax year.
The residence nil rate band will also remain at £175,000
National Living Wage
The rates for National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age) from 1 April 2022 are shown below.
Dividend Tax
The dividend allowance will remain at £2,000. The rate of tax on divdends will rise by 1.25% from April 2022 as shown in the table below.
Corporation Tax
The main rate of corporation tax will remain at 19% for the year commencing 1 April 2022 and will rise to 25% from April 2023 for business with profits of £250,000 and over.
The rate for businesses with profits of £50,000 or less will remain at 19% however there will be a marginal rate (at 26.5%) for profits between £50,000 and £250,000.
Super-deduction for investments in plant and machinery
A reminder that companies liable to corporation tax will temporarily be entited to increase allowances for expenditure on new plant and machinery.
For qualifying expenditure incurred from 1 April 2021 up to and including 31 March 2023 companies will be able to claim a super deduction providing a first year allowance of 130% on most new plant and machinery additions that ordinarily qualify for 18% main rate writing down allowances.
Also a first year allowance of 50% is available on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
The relief will not apply to contracts entered into prior to Budget day on 3 March 2021.
Annual Investment Allowance (AIA)
The temporary £1 million level of AIA has been extended to 31 March 2023.
Recovery Loan Scheme
The recovery loan scheme will be extended to 30 June 2022 for small and medium sized business but the government guarantee will be reduced from 80% to 70%.
VAT
Registration and deregistration thresholds
The current VAT thresholds for registration and deregistration (£85,000 and £83,000 respectively) will be maintained until 31 March 2024.
Company Car and Van benefits
The company car fuel multiplier will increase to £25,300 from April 2022.
The company van benefit will increase to £3,600 from April 2022.
The van fuel benefit will increase to £688 from April 2022.
The company car benefit for electric cars will increase to 2% of the list price from 6 April 2022 (currently 1%).
The table below shows the rates for all company cars from 6 April 2022:
