Autumn Budget 2021

 

• The Chancellor, Rishi Sunak, delivered his Autumn Budget 2021 today (27 October 2021) which was entitled “A stronger economy for the British people”.
• A number of policy papers have been published on the Government page. A full summary of the Budget can be found here.

 

Aspire Summary:

National Living Wage and National minimum wage increase:

The Chancellor has announced a 6.6% increase to the National Living Wage as well as increases to the National Minimum Wage rates.

Click here to read Aspire’s summary.

The Health and Social Care Levy:

Government has legislated for a new 1.25% Health and Social Care Levy to fund a historic investment in the NHS and social care. The Levy will apply to the same population and income as Class 1 and Class 4 National Insurance contributions (‘NICs’).

The Levy will be effectively introduced from April 2022, when NICs for working age employees, self-employed people and employers will increase by 1.25% and be added to the existing NHS allocation.

From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to the earnings of individuals working above State Pension age, and NICs rates will return to their 2021-22 levels.

You can read Aspire’s previous news here.

Dividend rates:

The Finance Bill 2021-22 will introduce an increase to the rates of income tax applicable to dividend income by 1.25%.

This means that;

• The dividend ordinary rate will be set at 8.75%,
• The dividend upper rate will be set at 33.75%, and
• The dividend additional rate will be set at 39.35%.

The changes will apply UK-wide and will take effect from 6 April 2022.

National Insurance contributions (NICs) rates and thresholds:

The budget confirmed that Government will use the September CPI figure of 3.1% as the basis for uprating National Insurance limits and thresholds, and the rates of Class 2 and 3 NICs, for 2022-23. This excludes the Upper Earnings Limit and Upper Profits Limit which will be maintained at current levels in line with the higher rate threshold for income tax.

Making Tax Digital for Income Tax Self Assessment (ITSA):

Sole traders and landlords with income over £10,000 will have an extra year to prepare for Making Tax Digital (MTD) which will now be introduced from 6 April 2024. Further, general partnerships will not be required to join MTD for ITSA until 6 April 2025.

HM Revenue and Customs (HMRC):

The HMRC settlement will increase to £5.2 billion in 2024-25. The budget confirms that this funding will ‘ensure the department can continue to support taxpayers to get their tax right, deliver a secure and efficient customs border, and continue its transformation into one of the most digitally advanced tax authorities in the world.’

This additional funding aims to;

• Provide HMRC with the resources it needs to continue bearing down on tax avoidance and evasion
• Build a modern, digital tax system fit for the 21st century
• Modernise HMRC’s IT systems and improve the quality, resilience and security of its digital services, and
• Support the government’s strategy to improve our international competitiveness and create a truly global Britain

Clamping down on promoters of tax avoidance:

The Chancellor confirmed that Government will legislate in the Finance Bill 2021-22 for further measures to clamp down on promoters of tax avoidance. The package of measures will:

• Allow HMRC to freeze a promoter’s assets so that the penalties they are liable for are paid
• Deter offshore promoters by introducing a new penalty on the UK entities that support them
• Provide for the closing down of companies and partnerships that promote tax avoidance schemes, and
• Support taxpayers to steer clear of avoidance schemes or exit avoidance quickly, by sharing more information on promoters and their schemes

Business Rates:

The Chancellor confirmed plans to alter business rates including;

• Freeze the business rates multiplier for a second year, from 1 April 2022 until 31 March 2023, keeping the multipliers at 49.9p and 51.2p.
• Introduce a new temporary business rates relief for eligible retail, hospitality and leisure properties for 2022-23. Eligible properties will receive 50% relief, up to a £110,000 per business cap 144 Autumn Budget and Spending Review 2021
• Increase the frequency of business rates revaluations so that they take place every 3 years instead of every 5 years, starting in 2023