Monthly Archives: October 2021

Autumn Budget 2021 – Summary

Rishi Sunak presented the Autumn 2021 Budget on Wednesday 27 October 2021.

This blog focuses on the direct and indirect tax measures announced, as well as the announcements made previously which affect the 2022-23 tax year and beyond for English tax payers.

It concentrates on the issues likely to affect you, your family and your business.

There was little new news in respect of tax in the Autumn Budget with many measures having been been leaked beforehand.  There were also key announcements made in the months leading up to the Budget that were not mentioned in the speech today, as well as the usual measures not mentioned, but just included in the documentation accompanying the Budget. I will bring them together in this update.

If you have any questions please do not hesitate to contact me for advice.

Main Budget proposals from the Autumn Budget/ Announcements

  • There will be a new social care levy of 1.25% on employer, employee and self employed national insurance.  This will initially be implemented from 6 April 2022 with a 1.25% increase in the rates of national insurance, but from April 2023 will become a separate levy.  Tax rates on dividends will also increase by 1.25%. (Self employed: National Insurance (NI) for the self employed, Employed: National Insurance Contributions (NI), Dividends: Tax rates)
  • The Living Wage (minimum wage for over 23 year olds) will increase to £9.50 per hour (from £8.91) from 6 April 2022 (Minimum wage)
  • There will be a reform of tax basis periods for unincorporated businesses (mainly sole traders and partnerships) which will affect businesses do not draw up their accounts to 31 March or 5 April.  This will take effect from the 2024-25 tax year with a transitional year in 2023-24 (Basis period reform)
  • Making Tax Digital for income tax was due to start from 6 April 2023.  This has now been delayed to 6 April 2024 (Making Tax Digital).
  • The earliest age from which most pension savers can access their pension savings without incurring a tax charge will rise from 55 to 57 with effect from April 2028 (Pensions).

Main Budget proposals from the Spring Budget

A reminder of the main announcements from the March Budget, still relevant today:

  • The main corporation tax rate will increase to 25% with effect from 1 April 2023.  There will be a small companies rate of 19% for businesses with profits of less than £50,000 with marginal rates up to £250,000.
  • Many bands and thresholds will be frozen until 5 April 2026, including: the personal allowance (£12,570), the 20% tax band (£50,270 for most tax payers),  the inheritance tax thresholds (£325,000 standard and £175,000 residence), the capital gains tax exempt amount (£12,300 for individuals) and the pension lifetime allowance (£1,073,100).
  • The VAT registration threshold will remain at £85,000 until at least April 2024.

Autumn Budget 2021 – Corporate and Business Tax

Corporate tax

Corporation tax rates

Corporation tax will remain at 19% for the years beginning 1 April 2021 and 1 April 2022.

As announced in the Spring Budget, from 1 April 2023, the main rate of corporation tax will increase to 25%, and will apply to profits over £250,000.  A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.

The lower and upper limits will be proportionately reduced for short accounting periods and where there are associated companies.

Trading losses

Normally, trading losses can be carried back to the previous year.

The Chancellor announced in the Spring Budget, a temporary extension to the loss carry back rules for company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020 to 2021 and 2021 to 2022 for unincorporated businesses.   Losses in these periods will be available to carry back for up to 3 years, with losses being carried back against later years first.

Carry back will be subject to a cap of £2,000,000.

Dividend tax

The nil rate dividend allowance will remain at £2,000 for 2021-22.

Self employment

National Insurance (NI) for the self employed

Class 2 NI will increase to £3.15 per week for 2022-23.

The rate of Class 4 national insurance will increase to 10.25% (from 9%) from 6 April 2022 due to the first stage of introduction of the new Social Care levy announced in September.

From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to income from employment or self-employment of individuals working above State Pension age, and National Insurance contribution rates will return to their 2021 to 2022 levels.

Basis period reform

Basis periods are the accounting periods used for a tax year.  Currently, sole traders and partners are taxed based on their accounting year ending in the tax year.  So, for example, for the 2020-21 tax year, that would include the year ended 31 March 2021, but also year ends from earlier in the tax year, such as 30 April 2020.

If you have a year end other than 31 March or 5 April, you will usually have been taxed on some profits twice in the first years and these ‘overlap’ profits are carried forward to be offset at a later date – normally when you cease trading.

Hidden in the accompanying documents to the Budget was confirmation that the Government will reform basis periods with effect from the 2024-25 tax year, such that profits will be taxed in the tax year in which they arise.   There will be a transitional year in 2023-24.

So, if you have a 5 April or 31 March (which is deemed to be the same as 5 April to save adjusting for a few days), there will be no change for you.

If you have a different year end, some profits will again be taxed twice, but you will be able to offset you overlap profits.

To give an example.  Say you have a 30 April year end, the profits taxed in year tax year will be:

2022-23 – based on the year ended 30 April 2022

2023-24 – based on the year ended 30 April 2023 plus 11 months of the year ended 30 April 2024 less your overlap profits

2024-25 – based on 1 month of the year ended 31 April 2024 plus 11 months of the year ended 30 April 2025

This may result in a higher than usual taxable income in 2023-24 since profits usually grow over time, so the overlap profits are likely to be less than the addition amount brought into the year.

For businesses with higher profits in 2023 to 2024 due to the change in basis, the transitional period additional profits will be automatically spread  over a period of five years. Businesses will be able to elect out of spreading and accelerate the charge, to treat additional amounts as arising in the tax year.

What that really means is that if you do not have a 31 March/5 April year end, unless there are strong business reasons for an alterative year end, you may want to switch to a 31 March/5 April year end as soon as it makes sense to – which will probably be the 2024-25 tax year if you want to spread the transitional profits.

Making Tax Digital

Making Tax Digital (MTD) has been going through consultations over the past few years.   The current status of MTD is as follows:

VAT

From April 2019, all VAT registered businesses with a turnover in excess of the VAT threshold (£85,000) have been required to file their VAT returns through compliant software under making tax digital.  From April 2021, the soft-landing rules cease, which means that all transfers of data must be by digital links (for example, you cannot take the information from a spreadsheet and type it into a website to file your VAT – you must be able to upload the information from the spreadsheet to the website digitally).

It was confirmed in the Budget that MTD for VAT will be extended to all VAT registered businesses from April 2022.

Income tax

MTD ISTA (Income tax self assessment) will be compulsory for the self employed, partnerships and landlords with gross income (ie before deducting any costs) of £10,000 or more.  Tax payers will be required to make quarterly reports of their income and expenses digitally, together with a fifth filing to finalise the figures and report any other income.

Every transaction will have to be recorded individually (ie you can’t add the sales/rent receipts for the quarter together and report a total figure, you have to enter every receipt individually), and that the information has to be transferred electronically to HMRC quarterly, with no retyping at any stage.

MTD ITSA was due to start from 6 April 2023, but that has now been delayed to 6 April 2024 for the self employed and landlords and 6 April 2025 for general partnerships.

Corporation tax

MTD for corporation tax is currently in consultation and will not be made compulsory until 2026 at the earliest.

Capital Allowances

Businesses can claim an “annual investment allowance” (AIA) when they buy plant and machinery for use in the business.  The standard limit is £200,000, which means that businesses can claim an immediate tax write down of the first £200,000 of expenditure every year.  The AIA was temporarily increased to £1,000,000 for two years from 1 January 2019.  This was extended in the Spring Budget to 31 December 2021, and again in the Autumn Budget to 31 March 2023.

For asset purchases in excess of the AIA, as well as some non-qualifying expenditure such as cars, expenditure goes into one of two pools – the main rate or the special rate pool, with current writing down allowances of 18% and 6% respectively, on a reducing balance basis.

The Chancellor announced in the Spring Budget a new ‘Super-deduction’ to encourage companies (NB Companies only, it does not include personal tax payers) to invest.  From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying plant and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

Cars with zero emissions are entitled to a 100% tax write down in the first year, those between up to 50g/km go into the main (18%) rate pool and those with emissions over 50g/km into the special (6%) rate pool.

The Structures and Buildings Allowance remains at 3%.

Research and development tax credits

Companies can claim an enhanced tax deduction for research and development costs.

Changes were announced to the scope of costs eligible for relief by expanding qualifying expenditure to include data and cloud costs from April 2023.

There will also be changes to encourage R&D carried out within the UK.

Business Rates

The Chancellor announced in the Budget that there would be key reforms to business rates from 2023, including more frequent revaluations, investment relief for green technologies and business rates improvement relief.

He also announced that next year’s increase in the multiplier would be cancelled, and a 50% discount for businesses in the retail leisure and hospitality sectors for 2022-23 (subject to a £110,000 per business cap).

Online sales tax

The government has announced its plans to consult and explore the arguments for and against the introduction of an ‘Online Sales Tax’.

Autumn Budget 2021 – Personal Tax

Tax rates

There were no changes to rates of income tax announced in the Budget.

However, it was announced in September that the tax rates on dividends would increase by 1.25% in line with the increase in national insurance for the Social Care Levy.  This means that for 2022-23, dividends in the basic/higher/additional rate bands will be charged at 8.75%/33.75% and 39.35% respectively.

Allowances and tax bands

The personal allowance for 2022-23 will be £12,570, with the income on which you start to pay tax at 40% increasing to £50,270.  These rates will be frozen up to and including the 2025-26 tax year.

(NB if you earn over £100,000 you lose £1 of personal allowance for every £2 you earn over £100,000 so your 40% threshold will effectively be less).

This means that most people with straight forward tax affairs and no benefits in kind (for example, cars or health insurance) should have a tax code of 1259L.

Other allowance levels can be found on the HMRC web site here.

ISAs

The ISA limit will remain at £20,000 for 2022-23

The Junior ISA and Child Trust Fund subscription limits will remain at £9,000.

The Lifetime ISA

A reminder that the ‘Lifetime ISA’ was introduced from 6 April 2017.  This allow adults under 40 to open a Lifetime ISA and pay in up to £4,000 per annum.  The government will add a 25% bonus to the ISA, so, up to £1,000.

Contributions can continue up to the age of 50.

Funds can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn, with the bonus, from the age of 60.

Savers can make withdrawals at any time before the age of 60, but the bonus element and any interest or growth on it will have to be returned to the government.  An additional 5% charge applies if the withdrawal is not for the purchase of your first home.

Dividend tax

The nil rate dividend allowance will remain at £2,000 for 2022-23.

Child Benefit

There were no changes announced to child benefit in the Budget.  Rates for 2021-22 are £21.15 for the first child and £14.00 for subsequent children.  The rates for 2022-23 will be set in November.

Don’t forget that there are special rules for higher earners which mean that, once the income of one of the parents reaches £50,000, 1% of the Child Benefit award will effectively be lost for every £100 of that parent’s income between £50,000 and £60,000 and at £60,000 of income, any remaining benefit will be withdrawn.

There have been some news stories throwing in to doubt HMRC’s ability to raise assessments where the Child Benefit Tax charge has not been declared – there were provisions in the Autumn Budget to secure the ability.

Landlords

Capital gains tax

The rumoured changes to capital gains tax did not happen, but the capital gains tax allowance has been frozen at £12,300 until 5 April 2026.

A reminder that, for disposals of residential property by UK residents made on or after 6 April 2020, a return in respect of the disposal must be made to HMRC within 60 days (increased from 30 in the Autumn Budget for disposals after 27 October 2021) of the disposal, and a payment on account made at the same time. The self-assessed calculation of the amount payable on account takes into consideration unused losses and the person’s annual exempt amount. The rate of tax for individuals is determined after making a reasonable estimate of the amount of taxable income for the year.

Interest deduction

A reminder of the interest restrictions announced in the Summer Budget 2015 that started to come in to effect from April 2017, are fully in effect for 2020-21.

Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits if they pay tax at the higher rate. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

Making Tax Digital

MTD ISTA (Income tax self assessment) will be compulsory for the self employed and landlords with gross income (ie before deducting any costs) of £10,000 or more.  Tax payers will be required to make quarterly reports of their income and expenses digitally, together with a fifth filing to finalise the figures and report any other income.

Every transaction will have to be recorded individually (ie you can’t add the sales/rent receipts for the quarter together and report a total figure, you have to enter every receipt individually), and that the information has to be transferred electronically to HMRC quarterly, with no retyping at any stage.

MTD ITSA was due to start from 6 April 2023, but that has now been delayed to 6 April 2024 for the self employed and landlords and 6 April 2025 for general partnerships.

Penalties for late submission and late payment of tax

A new points based penalty regime will be introduced for VAT and Income Tax Self Assessment (ITSA) to replace existing penalties for regular tax return submission obligations.

The changes will come into effect from April 2024 for those submitting quarterly updates through MTD and 6 April 2025 for other ITSA tax payers.  The new regime for VAT will come in to effect for periods staring on or after 1 April 2022.

Late submission penalties

When a taxpayer misses a submission deadline they will incur a point. Points accrue separately for VAT and for ITSA.

A taxpayer becomes liable to a fixed financial penalty of £200 only after they have reached the points threshold.

The level of points threshold depends on the taxpayer’s submission frequency: Annually = 2 points / Quarterly = 4 Points / Monthly = 5 Points.

Late payment penalties

There is no penalty at all if the taxpayer pays the tax late but within 15 days of the due date.

The first penalty is set at 2% of the outstanding amount if they pay between 16 days and 30 days after the due date.

It is set at 4% of the outstanding amount if there is tax left unpaid 30 days after the due date.

A second late payment penalty is charged at a rate of 4% per annum, calculated on a daily basis on the total unpaid tax incurred from day 31.

To avoid a penalty or penalties, the taxpayer will need to either pay or approach HMRC to agree a Time to Pay Arrangement (TTP).  The penalty will stop accruing from the date the TTP is agreed.

Universal Credit

Universal credit is the ‘new’ benefit that replaces a number of old benefits, such as income support, housing benefit and working and child tax credits.  At the moment, some people remain on the old benefits, but are being moved to Universal Credit as they make amendments to claims.

The maximum benefit is calculated based on individual circumstances and then a deduction is made for earnings above a lower threshold (‘the Work Allowances’) at a set withdrawal (taper) rate.

The Chancellor announced in the Budget that the Work Allowances threshold would be increased by £500 and that the taper rate would be reduced from 63% to 55% by 1 December 2021.

The taper is applied to income after deduction of tax, national insurance and relevant pension contributions.  So, to put it into context:  if a claimant is a basic rate tax payer and earns an extra £100, not paying pension contributions, their net income on their payslip would increase by £68.  They would then have 55% of that (using the reduced taper rate) deducted from their Universal Credit payment for the next month.  So of that £100 extra earned, they keep £30.60.

Autumn Budget 2021 – Employment Issues

National Insurance Contributions (NI)

On 7 September 2021, the Government announced an increase in Class 1 (Employer and Employee) national insurance of 1.25% as a new ‘Social Care Levy’.

The Levy will take effect from April 2022, when National Insurance contributions for working age employees, self-employed people and employers will increase by 1.25%.

From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to income from employment or self-employment of individuals working above State Pension age, and National Insurance contribution rates will return to their 2021 to 2022 levels.

So, for 2022-23, employee NI will be 13.25% and employer NI will be 15.05% (increased from 12% and 13.8% respectively).  Self employed (class 4) will be 10.25% (increased from 9%).

The primary and secondary thresholds (at which employees and employers, respectively, start to pay NI) will increase to £190 and £175 per week, respectively.  This means that the lower national insurance threshold for employees (and the self employed) will be £9,880 per annum, and the threshold for employers will be £9,100.

This means that company directors paying themselves the national insurance threshold can have an increase in pay from April 2022 to £758.33 per month (from £736.67).  It may be beneficial for some to increase their pay to £9,880, or even £12,570, depending on their circumstances.

The upper earnings (or profits for the self employed) limit will be £50,270 (£967 per week), aligned with the point at which 40% tax becomes payable.  This has been frozen until 2025-26.

Details of the rates of NI can be found here.

Employer’s Employment Allowance

The employment allowance will remain at £4,000 per annum for 2022-23.

The allowance will continue to be restricted to companies with employer national insurance bills of less than £100,000.

Minimum wage

The Minimum Wage rates from 1 April 2022 will be:

  • 25+ (National Living Wage) – increases from £8.91 to 9.50 per hour
  • 21 to 24 year olds increases from £8.36 to £9.18 per hour
  • 18 to 20 year olds increases from £6.56 to £6.83 per hour
  • 16 to 17 year olds increases from £4.62 to £4.81 per hour
  • apprentices increases from £4.30 to £4.81 per hour

Home working allowance

The maximum flat rate Income Tax deduction available to employees to cover additional household expenses will remain at £6 per week where they work at home under homeworking arrangements from 6 April 2021.

This can usually be paid only when there is a regular pattern of working from home, but under the Covid relaxations, can be paid/claimed for 2020-21 and 2021-22 if there has been even one day of working from home.

Autumn Budget 2021 – Pensions

Increase in age for accessing pensions

The government will legislate in Finance Bill 2021-22 to increase the earliest age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge, the normal minimum pension age, from 55 to 57. This increase will have effect from 6 April 2028.

This measure will affect individuals born after 5 April 1973 whose earliest date to access their pension benefits will see a two-year delay to those born on or before that date.

Amendments to Net Pay Schemes

The Autumn Budget documents include provisions to make top ups to pension schemes for non-taxpayers in net pay schemes, with effect from contributions made in the 2024-25 tax year onwards.

To explain:

There are two methods of providing tax relief for employee contributions: Relief at Source (more common) and Net Pay.

Under relief at source, tax relief is given by a top up paid by HMRC into the pension scheme.  So, if an employee wants to pay £100 into their pension, £80 is deducted from their after-tax income, and HMRC adds the extra £20 directly to the scheme.

Net pay schemes are those where the tax relief on employee contributions is given through the payroll.  So, if an employee pays £100 into the pension as an employee contribution, £100 is deducted from their pay before tax (but not NI) is calculated, so that, if they are a basic rate tax payer, it still costs them £80.

The advantage of net pay schemes is that, for a 40% tax payer, relief is given automatically, whereas for relief at source, it has to be claimed.

The big disadvantage currently is that, if an employee does not pay tax, they get no tax relief.  So, the £100 contribution costs them £100, whereas under relief at source, they still get the £20 rebate added to their scheme.

State Pension

The Government announced prior to the Budget that they would temporarily suspend the earnings element of the ‘Triple Lock’ used to uprate the State Pension and Pension Credit due to distortions caused by Covid. Instead, for 2022-23 the new and basic State Pension, Pension Credit and survivors’ benefits in industrial death benefit will increase by the higher of CPI or 2.5%

Since CPI in September (the relevant month) was 3.1%, the increase will be 3.1%.

This means that the full single tier state pension (for those qualifying after April 2016) will increase from £179.60 per week to £185.15 per week.  The basic state pension (for those reaching pension age before April 2016) will increase from £137.60 to £141.85.

Pension allowances

The lifetime allowance increased in line with the Consumer Prices index to £1,073,100 for 2020-21.

The Chancellor announced in the Spring Budget that this allowance will be frozen until 5 April 2026.

The annual allowance remains at £40,000.  This currently tapers to £4,000 for those earning over £240,000, reducing by £1 for every £2 that income exceeds £240,000.

There is a reduced annual allowance for those who have started to draw from a pension. This remains at £4,000 for 2022-23.

Autumn Budget 2021 – VAT

There were no changes announced to the general rate of VAT.

The VAT registration and de-registration limits will remain frozen at £85,000 and £83,000 respectively and will now be frozen until at least 31 March 2024.

VAT on the hospitality industry

The VAT rate for hospitality, hotel and holiday accommodation and admission to certain attractions was previously reduced to 5% up until 31 March 2021 due to Covid.

In the Spring Budget 2021 that the temporary reduced rate was extended for a further six-month period at 5% until 30 September 2021 and then a new reduced rate of 12.5% was be introduced which will end on 31 March 2022.

Making Tax Digital for VAT

From April 2019, all VAT registered businesses with a turnover in excess of the VAT threshold (£85,000) have been required to file their VAT returns through compliant software under making tax digital.  From April 2021, the soft-landing rules cease, which means that all transfers of data must be by digital links (for example, you cannot take the information from a spreadsheet and type it into a website to file your VAT – you must be able to upload the information from the spreadsheet to the website digitally).

It was confirmed in the Spring Budget that MTD for VAT will be extended to all VAT registered businesses from April 2022.

Penalties for late submission and late payment of tax

A new points based penalty regime will be introduced for VAT and Income Tax Self Assessment (ITSA) to replace existing penalties for regular tax return submission obligations.

Late submission penalties

When a taxpayer misses a submission deadline they will incur a point. Points accrue separately for VAT and for ITSA.

A taxpayer becomes liable to a fixed financial penalty of £200 only after they have reached the points threshold.

The level of points threshold depends on the taxpayer’s submission frequency: Annually = 2 points / Quarterly = 4 Points / Monthly = 5 Points.

Late payment penalties

There is no penalty at all if the taxpayer pays the tax late but within 15 days of the due date.

The first penalty is set at 2% of the outstanding amount if they pay between 16 days and 30 days after the due date.

It is set at 4% of the outstanding amount if there is tax left unpaid 30 days after the due date.

A second late payment penalty is charged at a rate of 4% per annum, calculated on a daily basis on the total unpaid tax incurred from day 31.

To avoid a penalty or penalties, the taxpayer will need to either pay or approach HMRC to agree a Time to Pay Arrangement (TTP).  The penalty will stop accruing from the date the TTP is agreed.

Autumn Budget 2021 – Capital Gains Tax

The rumoured changes to capital gains tax (CGT) again failed to materialise.

The only change to capital gains tax in the Autumn Budget was a welcome measure hidden in the accompanying documents to extent the time limit for making CGT returns and payments for residential properties for disposals that complete on or after 27 October 2021 from 30 days to 60 days.

For the tax years 2021-22 to 2015-26, the capital gains tax (CGT) annual exempt amount will remain frozen at £12,300 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees will be £6,150.

For capital gains above the annual exempt amount the CGT rate for basic and higher rate tax payers will remain at 10 and 20 per cent respectively.

Gains on residential properties (not qualifying as your personal private residence) and carried interest (the share of profits or gains that is paid to asset managers) will remain at the 18 and 28 per cent for basic and higher rate tax payers respectively.

Residential properties

A reminder that, for disposals of residential property by UK residents made on or after 6 April 2020, a return in respect of the disposal must be made to HMRC within 60 (increased from 30 in the Autumn Budget) days of the disposal, and a payment on account made at the same time. The self-assessed calculation of the amount payable on account takes into consideration unused losses and the person’s annual exempt amount. The rate of tax for individuals is determined after making a reasonable estimate of the amount of taxable income for the year.  No return will be required if no tax is due (for example, for disposals covered by private residence relief).

Entrepreneurs’ Relief

Entrepreneurs’ Relief provides for a lower rate of Capital Gains Tax (10%) to be paid when disposing of all or part of a business where certain criteria are met, subject to a lifetime limit of £1 million of qualifying gains.

Autumn Budget 2021 – Motoring costs

Fuel prices

Fuel duty was frozen again (per the Chancellor – the 12th successive year of the freeze).

Vehicle Excise Duty (VED)

VED (Road Tax) for cars, vans and motorcycles will increase in line with the Retail Price Index from 1 April 2022.  That for HGVs will be frozen for 2022-23.

Business mileage payments

HMRC sets an approved mileage allowance payment (AMAP) rate. This is the rate at which employers may reimburse business mileage tax-free.

The AMAP rate will remain at 45p for the first 10,000 miles per annum and 25p per mile for any excess.

Company Cars

Car benefit

Car benefits are based on a percentage of the list price of the car.  The percentage depends on the CO2 emissions of the vehicle.
The rates for 2021-22 to 2024-25 remain un changes in the Budget and can be found here.
Note that there was a 0% benefit rate for zero emission cars for 2020-21, increasing to 1% in 2021-22 and 2% in 2022-23.  The Spring Budget documents confirm that the rate will remain at 2% for 2023-24 and 2024-25.
Van benefit
The van benefit in kind charge for vans emitting CO2 will increased from £3,490 to £3,600 for 2022-23.
The benefit for zero emission vans will remain at zero for 2022-23.

Fuel benefit

The base figure for calculating the benefit where private fuel is provided alongside a company car will increase with CPI to £25,300 (from £24,600) with effect from 6 April 2022.

The van fuel benefit charge will be £688 (increased from £669) for 2022-23.

Autumn Budget 2021 – Other matters

Inheritance tax (IHT)

There were no changes to inheritance tax rates.

The standard nil rate band remains at £325,000 and the he residence nil rate band at £175,000.  These bands will be frozen up until 5 April 2026.

There is a tapered withdrawal (at a rate of rate of £1 for every £2) of the additional nil-rate band for estates with a net value of more than £2m.  It is also available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

Any unused nil rate bands can be transferred to a surviving spouse or civil partner

Stamp Duty Land Tax (SDLT)

The stamp duty holiday ended on 1 October 2021.

Help to Grow Schemes

The Chancellor announced two Help to Grow schemes in the Spring Budget: Management and Digital.  The schemes will commence in the Autumn, but businesses can register interest now.

The Management scheme will will offer a new executive development programme with mentoring and peer learning, and government will contribute 90% of the cost.

The Digital scheme will help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each.

The schemes are only available to businesses employing between 5 and 249 employees that have been trading for more than 12 months.

Further details can be found here.

Freeports

The Chancellor announced the creation of 8 Freeports in England in the Spring Budget.

It was confirmed in the Autumn Budget that the first tax sites will be in Humber, Teesside and Thames, and those Freeports will be able to begin initial operations from November 2021.  The government remains committed to establishing at least one Freeport in Scotland, Wales and Northern Ireland.

Freeports are special economic zones with different rules to make it easier and cheaper to do business. They’re well-established internationally, but we’re taking a unique approach.

Freeports will have:

  • Simpler planning;
  • Infrastructure funding;
  • Cheaper customs – with favourable tariffs, VAT or duties;
  • Lower taxes – with tax breaks to encourage construction, private investment and job creation.

The English Freeports will be at:

  • East Midlands Airport.
  • Felixstowe and Harwich.
  • Humber.
  • Liverpool City Region.
  • Plymouth.
  • Solent.
  • Thames.
  • Teesside

The government remains committed to establishing at least one Freeport in Scotland, Wales and Northern Ireland.

Alcohol Duty

The Chancellor announced a ‘radical simplification’ of alcohol duties to take effect from February 2023, with the number of duty rates being reduced from 15 to 6, and being amended to reflect the alcohol strength rather than the drink type.

For example, currently sparkling wine has a higher duty rate than the equivalent still wine, so sparkling wine will benefit from the changes.

There will also be a ‘draught relief’ introduced to give lower rates of duty on draught beer and cider sold in pubs – effectively reducing the duty rate by 3p per pint, and small producers relief extended to small cider makers.

Air Passenger Duty

The Chancellor announced a reduction in Air Passenger Duty for flights between UK airports and an increased rate for ‘ultra long haul’ flights (of over 5,500 miles).  These changes will take effect from April 2023.