The Chancellor of the Exchequer Rishi Sunak announced The Treasury’s much anticipated Autumn Budget and spending plans for the fourth coming year on Wednesday 27th November 2021, focusing on the “Post-Covid” era.
The Chancellor announced a raft of measures, some of which had been pre-announced, to allow the UK economy to grow and build back following the Coronavirus Pandemic. As always, these measures could be considered good or bad depending on your personal viewpoint and your personal situation and here are the main headlines from his announcements: –
The National Living Wage and The National Minimum Wage
From 1st April 2022, both the National Living Wage and the National Minimum Wage will change to the following rates: –
Apprentices are entitled to the apprentice rate if they’re either:
- aged under 19
- aged 19 or over and in the first year of their apprenticeship
Business Rates Reforms Revealed
From April 2022, a 50% discount in business rates of up to £110,000 will apply to retail, hospitality and leisure businesses in England for a year. This will follow the current 66% discount, which is capped at £2 million and due to end on 31st March 2022.
More broadly, the Chancellor announced that a 100% improvement relief for business rates will be introduced in 2023. The relief will be reviewed in 2028, and from 2023, business rates will be reviewed every three years.
Additional R&D tax relief announced
Research and Development (R&D) tax relief will be made available for a wider range of business costs, including cloud computing and data. The Chancellor also revealed that from April 2023, more R&D tax relief will be available for UK projects.
Subcontracted Costs on R&D Relief
There is currently no restriction on the location of the qualifying R&D activities; subcontracted costs may be undertaken overseas. In an attempt to ensure that the UK taxpayers’ contribution to providing this relief is best targeted at providing the best results for the UK overall, the availability of the relief will be restricted to expenditure on UK R&D activities only from April 2023.
Capital Gains Tax window extended
From today, clients who sell a UK residential property will have an extended window of 60 days after the sale’s completion date in which to report and pay Capital Gains Tax.
Property Developers Tax
The Chancellor confirmed in his Autumn Budget 2021 speech the introduction of a 4% residential property developer tax (RPDT) to be charged on profits of companies carrying out residential property development.
£1m level of Annual Investment Allowance extended
The level of Annual Investment Allowance will remain at £1 million until March 2023. This means that businesses will be able to continue claiming Annual Investment Allowance on qualifying assets up to the value of £1 million within a single year.
Basis period reforms announced for Sole Traders and Partnerships
It was announced that major changes to the Income Tax basis period rules will be introduced in April 2024. The basis period is the time period for which a sole trader or partnership pays tax each year. The future reforms announced this week will ensure that businesses pay tax on the profits they earn in the tax year, regardless of their accounting year dates.
Recovery Loan Scheme extended
The Recovery Loan Scheme, one of the financial measures introduced by the government in response to the Covid-19 pandemic, will be extended until 30th June 2022. Additional changes to the scheme, which had been due to close on 31st December 2021, will be introduced on 1st January 2022. These changes will affect who is eligible to use the scheme, the maximum amount of finance available and the guaranteed coverage that the government will provide to lenders.
The Health and Social Care Levy
As previously announced the Government will introduce the Health and Social Care Levy from April 2022, initially through National Insurance and then as a separate form of taxation.
Please see our previous post for more information regarding this.
Cultural Relief Rate Rise
The tax credit rates on the cultural reliefs – Theatre Tax Relief, Orchestra Tax Relief and the Museums and Galleries Exhibition Tax Relief – have been increased with immediate effect from 20/25% to 45/50%, providing a welcome boost to cash flows for these entities in difficult times.
The enhanced tax credit will remain available until April 2023, at which point they will be reduced to 30/35% for one tax year, reverting to their original level in April 2024.
The expiration of the Museums and Galleries Exhibition Tax Relief is delayed from April 2022 to April 2024 as a result of these amendments.
If you have any queries on any of these announcements or would like any further advice on anything else announced in the Autumn Budget 2021, please do not hesitate to get in touch with us.