Autumn Budget 2021

The chancellor has delivered his third Budget of 2021. In this article, we would like to briefly introduce you to what he announced.

National Living Wage will rise to £9.50 per hour from April 2022. There are also significant changes for apprenticeship minimum wage and trainees. Please see table below.

Good news for Universal Credit Claimants. Taper rate will be reduced from 63% to 55%. Which means that for every extra £1 earned they can keep 45p instead of 37p. The work allowance will increase by around £42 per month or £500 per year.

Big deduction for Capital Investment. Companies can deduct 130% for the cost of new plant or equipment bought before 1^st April 2023. New assets such as fixtures and integral features in buildings can also qualify for a 50% first year deduction. What is worth to remember is that bought asset has to be new not second hand.

Increases in Income Tax – the tax payable on dividends will rise from 7.5% to 8.75%. For the higher rate tax payers the increase will be from 33.75% to 39.35% in 2022-23.

Deduction of 230% for Research and Development. Government incentive companies offering big tax reliefs for qualifying cost and work undertaken in UK.

For the year 2022-2023 retail and hospitality businesses can claim 50% business rates relief capped at £110,000 per business.

HMRC extended the period for reporting and paying capital gains tax on relevant property disposals from 30 to 60 days for deals completed on and after 27^th October 2021. Property deals completed before that date still need to be reported within 30 days if tax is payable.

High income child benefit charge (HICBC) must be declared to HMRC on tax return. This applies for the families where the highest earner has total income of £50,000.

National Insurance Contribution will rise by 1.25% which will be later replaced form April 2023 by new tax – The health and social care (HSC) levy. This is to pay for the NHS and Social Care that desperately need funding. NI will be increase for both Employers and Employees and Self Employed people too.

Making Tax Digital required for self-employed tax returns. These regulations will require you to keep records of all your business transactions in a digital format and send the record of income and expenses to HMRC quarterly. You will also have to submit an end of period statement (EOPS) after the tax year end and a finalisation statement reporting all other non-business income. The new changes will be introduced from April 2024.

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Greenlight Accountancy Team 😊