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.