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October 27, 2021
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Spelling Out the Autumn Budget 2021 Highlights

On 27 October 2021, Chancellor of the Exchequer Rishi Sunak announced a number of key spending pledges and tax changes. We have set out some of the highlights below:

Businesses

  • From April 2023, the qualifying expenditure definition for R&D tax relief will be expanded to include data and cloud costs. It was stressed that R&D will be refocused to ensure that the relief benefits the UK, hinting towards relief being restricted for R&D activities performed overseas. Further details regarding the government's plans for R&D, including tackling abuse of the relief and improving compliance, will be set out later in the autumn.
  • The increase in the main rate of corporation tax from 19% to 25% was confirmed, and will apply from 1 April 2023.
  • The temporary increase in the Annual Investment Allowance (AIA) to £1 million will be extended to March 2023, instead of ending in December 2021.
  • Companies that derive profits from UK residential property development will be subject to a new Residential Property Developer Tax. From 1 April 2021, the tax will be charged at 4% and will be included in the company tax returns of those companies.
  • The basis period rules will be simplified, with the transition to the new rules taking place in 2023/24, and the new rules coming into force on 6 April 2024. Further information regarding the basis period rules and the changes can be found on our previous blog here.
  • From 1 April 2023 the surcharge allowance on banking companies will be set at 3%.

Health & Social Care Levy

  • It was confirmed that the Health and Social Care Levy will be introduced. From April 2022, National Insurance Contributions for working age employees, self-employed people, and employers will increase by 1.25% percentage points. From April 2023, the Levy will be formally separated and will also apply to income from employment or self-employment of individuals above the State Pension age, with National Insurance Contribution rates returning to their previous levels.
  • From April 2022, the dividend rates will also increase by 1.25% percentage points. Therefore, the dividend rate will be 8.75% for basic rate, 33.75% for higher rate, and 39.35% for the additional rate.
  • Further information regarding these reforms can be found in our previous blog here.

Personal Tax & Pensions

  • The personal allowance, basic rate band and National Insurance thresholds will remain frozen at their 2021/22 levels until 6 April 2026
  • The Scheme Pays reporting and payment deadline will be extended such that the deadline for paying the charge relates to when the scheme administrator is notified of the charge, rather than a fixed period after the end of the tax year. This will have effect from 6 April 2022 but will be retrospective from 6 April 2016.
  • The deadline for submitting a Capital Gains Tax return on the sale of UK residential property will increase from 30 days after completion to 60 days. This also applies to non-UK residents.
  • Sole traders and landlords with income over £10,000 have been given another year to prepare for Making Tax Digital, with the rules now set to come into force from 6 April 2024. General partnerships will not be required to join until 6 April 2025.
  • New penalties for late submission and payment of tax will come into effect on 6 April 2024 for taxpayers who are required to submit digital quarterly updates through MTD (see above), and 6 April 2025 for all other taxpayers. Further information regarding the new penalty regime can be found on our previous blog here.

PD Tax Seminar - 29 October 2021

PD Tax will be holding a breakfast seminar at Weetwood Hall, Leeds where we will go through the budget announcements in more detail, along with some general comments on tax planning. Click here to register!

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https://pd-taxconsultants.co.uk/too-little-too-late-hmrc-overhauls-penalties-for-late-submissions/

https://pd-taxconsultants.co.uk/introduction-of-health-social-care-tax/

HMRC Set to Scrap Basis Periods for Businesses

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