On 27 October, the Chancellor Rishi Sunak delivered his Autumn 2021 Budget and summarised below are Wenn Townsend’s key messages for private individuals, business and charities.
No change for now
Arguably most surprising was the lack of significant announcements or changes to taxation rates in order to pay for the recent COVID support measures. Expected increases to Capital Gains tax or Inheritance tax did not come to fruition and there were no changes to income tax rates, allowances or pension contribution rules. VAT also remained unchanged.
The key changes that were announced
Research and Development and tax reliefs
As expected, and coming into effect from April 2023, qualifying R&D expenditure for eligible businesses will be expanding to incorporate cloud computing and data costs that had previously been ignored. Please contact us if you have detailed questions on what might now qualify.
The Chancellor also announced that all R&D will be “refocused” towards the UK and, whilst there will be more detail to come, this may have implications for UK companies that currently incur R&D expenditure overseas.
Annual Investment Allowance
The temporary increase to £1m per annum that was due to expire in December 2021 has been extended to March 2023, allowing businesses to receive greater tax relief from their investments. However, we would recommend that any business planning significant investment in the short term does speak with us first, given the known increases to Corporation Tax rates in 2023.
Cultural and Creative industry tax reliefs
A series of enhancements to existing reliefs for museums, galleries, theatres, orchestras and galleries were announced today. See our separate resource article by Arun Bahl here for more details.
Capital Gains Tax reporting and payment deadlines
There were no changes to the applicable rates but any disposals made from today onwards will now need to be reported to HMRC, along with any tax due on the gain, within 60 days rather than the current 30 day window.
Business rates
The business rates multiplier will be frozen again for 22/23 and there will be 50% relief for those eligible retail, hospitality and leisure properties in the same period. From April 2023 there will also be incentives for investment in renewable energy generation. We expect all changes to be applied by your relevant Local Authority although care should be taken to ensure that these have been applied correctly.
Some timely reminders
Corporation tax
As announced in March 2021 and discussed in our spring budget video, the rate will rise to 25% from April 2023.
Residential Property Developer Tax (RPDT)
First announced in February 2021, this new tax will come into force from April 2022 and represent a 4% charge on relevant profits over £25m.
Dividend rates
The Prime Minister recently announced an increase to the dividend rate of tax and by 1.25% and commences from 6 April 2022 therefore those businesses planning dividends in the next 6 months should take this into consideration.
Contact us
If you wish to understand more about the potential impact of these changes on your own situation or simply have detailed questions on a particular area, then we would strongly recommend talking to one of our colleagues in the ‘Us’ section of the website or contacting Andrew Rodzynski on acrodzynski@wenntownsend.co.uk
We have also included a more comprehensive article that covers all the items above in more detail and the rest of the budget announcements, which you can find here