2021 Autumn Budget
The Chancellor stood up to deliver his first Autumn Budget since his appointment in February 2020. He had to give a positive message regarding our future economic outlook against a backdrop of tax rises to try and stem the structural deficit arising after the pandemic has run its course.
As usual I will set out below the changes I feel are most relevant:
- The previously announced increase in Corporation Tax giving many companies a marginal tax rate of 26.5% set out in my Spring Budget blog.
- The increase of the rates of Income Tax on dividend income by 1.25% to 8.75%, 33.75% and 39.35% from April 2022. When combined with point 1 above for those with incomes over £50,000 will have a combined marginal rate of tax of over 50%. When combined with the loss of personal allowance this would give a marginal tax rate of over 65%. A clear disincentive to grow a small business into a larger one!
- A relaxing of Research & Development tax relief to allow data and cloud costs but restricted to the UK.
- Confirmation of the Making Tax Digital deferment for Income Tax to 06/04/2024.
- A very welcome change to the 30 days to pay CGT after completion on a residential property to a more reasonable 60 days. If the process to complete the return could be improved, particularly to allow agents to complete their clients’ returns, then the system may operate more smoothly.
- The already announced increase in National Insurance rates by 1.25% from April 2022 for one year initially.
The above tax changes were almost overshadowed by the large increase in public sector expenditure. The Budget deficit in 2020/21 was £247 billion and is forecast to be £122 billion in 2021/22, a surplus is not expected until 2023/24.
As ever the above is a summary of announcements not yet legislated for so no action should be taken without seeking clarification.