Industry News - 3rd November 2021
Following the Autumn Budget announced by Chancellor Rishi Sunak on 27 October 2021, please find below a summary of the key details.
No increase in Income Tax rates and the higher rate threshold is frozen at £37,700 through to April 2026. For the same period, the personal tax allowance is also frozen at £12,570 (£12,570 2021-22) and will apply to all regions of the UK.
Income Tax and dividend income
The current £2,000 dividend tax-free allowance is unchanged.
As announced on 7 September 2021, the tax rates payable on dividend income will increase in line with the 1.25% increase in certain NIC contributions. The rates that will apply in all regions of the UK from 6 April 2022 are:
• Dividends that form part of the basic rate band – 8.75% (7.5% 2021-22)
• Dividends that form part of the higher rate band – 33.75% (32.5% 2021-22)
• Dividends that form part of the additional rate band – 39.35% (38.1% 2021-22)
Starting rate for savings
The band of savings income that is subject to the 0% starting rate will remain at £5,000 for 2022-23.
The government announced earlier this year a 1.25% increase in certain National Insurance Contributions from April 2022. This is ring-fenced to provide funding for health and social care. From April 2023, this NIC increase will be withdrawn and replaced by a new Health and Social Care Levy at the same rate.
Pensions Lifetime Allowance
From April 2021 to April 2026 the pensions lifetime allowance will remain frozen at £1,073,100.
Capital Gains Tax
No major changes announced. The only one of note is the deadline for reporting chargeable residential property sales has increased from 30 days to 60 days. This covers sales of second homes or buy-to-let properties, not main residences.
No change in Corporation Tax rates until April 2023. For the financial year beginning 1 April 2022, the rate will remain at 19%.
As announced earlier this year, from 1 April 2023, there will be two rates of CT:
• Taxable profits up to £50,000 will continue to be taxed at 19%
• Taxable profits more than £250,000 will be taxed at 25%
• Profits between £50,000 and £250,000 will be subject to a marginal tapering relief. This would be reduced for the number of associated companies and for short accounting periods.
Reliefs for investments in qualifying assets
The temporary ‘super-deduction’ and a 50% first year allowance – that were introduced in April 2021 – will continue to apply to qualifying expenditure up to 31 March 2023.
The super-deduction allows businesses to remove 130% of qualifying expenditure as a deduction from taxable profits.
No changes to present rates and allowances. These are all frozen at current levels until April 2026.
This means the nil-rate band will continue to be £325,000 and the residence nil-rate band at £175,000, for this period.
There will be no changes to the 20% rate. The £85,000 registration limit and the £83,000 deregistration limit will remain at these levels until 31 March 2024.
The temporary reduced rate of 5% for hospitality, holiday accommodation and attractions was increased to 12.5% from 1 October 2021. This rate will remain until 31 March 2022 when it will revert to 20%. This acknowledges the disruption and financial hardship suffered by this sector during the COVID pandemic.
Increasing the normal minimum pension age
The earliest age at which pension savers can access their pensions without incurring an unauthorised payments tax charge is changing.
From 6 April 2028, the normal minimum pension age is increasing from 55 to 57.
ISA investment limits for 2022-23
The limits set for 2022-23 are:
• Adult ISAs – the limit remains at £20,000
• Junior ISA – limit remains at £9,000
National Living Wage increases
The NLW will increase to £9.50 per hour (previously £8.91) from 1 April 2022.
The full changes to the National Minimum Wage rates from 1 April 2022 are as follows:
• The 21 to 22 year-old rate will be £9.18 per hour
• The 18 to 20 year-old rate will be £6.83 per hour
• The 16 to 17 year-old rate will be £4.81 per hour
• The apprentice rate will be £4.81 per hour
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