On 27 October 2021, Chancellor Rishi Sunak delivered his budget speech outlining key changes to be implemented in the coming months and years. Although the Chancellor tinkered with some specific areas of the tax system, most small business owners will be relieved that it was a relatively quiet budget as far as mainstream tax changes go. Prior to the budget there was the usual chatter about the possibility of capital taxes being increased and perhaps capital gains tax reliefs being reduced but thankfully both capital gains tax and inheritance tax escaped attention again.
Given that COP26 is due to start within days, there was surprisingly little mention of any environment related issues, if anything a reduction in air passenger duty for internal flights and increased spending on roads is in conflict with the aims of the conference.
Some of the key tax related announcements were as follows;
- The earliest age at which pension schemes can be accessed without additional tax charges will be increased from 55 to 57 from April 2028
- Annual Investment Allowance to remain at £1 million until 31 March 2023
- Income tax allowances and rate bands to remain frozen until April 2026
- IHT nil rate band and CGT annual exempt amount to remain frozen until April 2026
- Health & Social Care Levy to be introduced from April 2022 which will see national insurance rates increase by 1.25%. In addition, this new levy will also see the tax rates applicable to dividends increase by 1.25% from the same date.
- R&D Tax Reliefs will be reformed from April 2023 to expand the qualifying expenditure to include data and cloud costs and also ensure the relief is focused on innovation within the UK.
- Making Tax Digital for income tax has been delayed for one year to April 2024 giving sole traders, partnerships and landlords more time to prepare.
- Capital gains tax on the sale of a residential property must now be reported and paid within 60 days of the date of sale
To read our 2021 Autumn Budget Report, be sure to download your copy here: Autumn Budget Report 2021