27th October 2021

Following the budget announced by Chancellor of Exchequer, Rishi Sunak, on 27th October 2021 with new updates on September that are relevant to individuals and businesses:

  1. Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from 6 April 2024 announced on September 2021. Initially it was planned to be effective from 6th April 2023 postponed due to the pandemic.
  2. Dividend tax and National insurance to be rise by 1.25% from 6th April 2022.
  3. National Living Wage to £9.50 an hour from April 2022.
  4. Planned rise in the alcohol duty on spirits, wine, cider, and beer cancelled.
  5. Mr Sunak has adjusted the universal credit taper, which reduces financial support as people work more hours. The rate is currently 63%, so for every extra £1 someone earns, their universal credit is reduced by 63p. Mr Sunak announced plans to cut this from 63% to 55%.
  6. Work allowances being increased by £500 – combined with the change to the taper, this is a tax cut worth more than £2bn. Nearly two million families will keep, on average, an extra £1,000 a year.
  7. Business rates to be retained and reformed. There will be new 50% business rates discount for businesses together with small business rates relief, in the retail, hospitality and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms.
  8. The government also announced the Annual Investment Allowance (AIA) limit of £1 million of expenditure on qualifying plant and machinery has been extended to 31 March 2023.
  9. New investment relief to encourage businesses to adopt green technology such as solar panels.
  10. A consultation into online sales tax to be held.
  11. Recovery Loan Scheme made available to businesses planning their way out of the Covid-19 lockdowns would be extended until 30th June 2022. From 1st January 2022,The scheme will only be open to small and medium-sized enterprises. The maximum amount of finance available will be £2 million per business. The guaranteed coverage that the government will provide to lenders will be reduced to 70%.
  12. The deadline to report and pay Capital gains tax (CGT) after selling UK residential property will increase from 30 days after the completion date to 60 days.
  13. Fuel duty rise scrapped for 2022/2023.

3rd March 2021

Chancellor Rishi Sunak has announced a new £65bn budget in the House of Commons on 3rd March 2021. Measures are set out to help business and jobs through the end of the pandemic, supporting a long-term economic recovery.

  1. Minimum wage to increase to £8.91 an hour from April for people aged 23 and over, The National Living Wage will rise to £8.91.
  2. The Personal Allowance will increase to £12,570 and Basic rate limit to £37,700, tax rate of 20% for 2021 to 2022. The higher rate threshold of 40% will increase to £50,270. These thresholds will then remain frozen until 05/04/2026.
  3. Coronavirus Job Retention Scheme (CJRS) has been extended to 30/09/2021. From July 2021, employers will need to contribute towards the cost of unworked hours:
    • Until 30/06/2021                      0%
    • 01/07/2021 – 31/07/2021        10%
    • 01/08/2021 – 30/09/2021        20%
  4. Rates of income tax, national insurance, VAT or Capital gains tax annual exemptions remain unchanged.
  5. Self-Employment Income Support Scheme (SEISS) have been announced:
    • The Fourth grant – 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500. The grant will cover the period February to April and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self-Assessment by 02/03/2021.
    • The Fifth grant – 80% of three months’ average trading profits if turnover has fallen by 30% or more, paid out in a single instalment and capped at £7,500. If turnover has fallen by less than 30% , the grant is 30% of eligible profits capped at £2,850. The grant will cover the period May to September and can be claimed from late July. Self-employed individuals must have filed a 2019-20 Self-Assessment by 02/03/2021.
  6. Universal Credit £20 uplift a week to be extended for another six months.
  7. Working Tax Credit claimants will get £500 one-off payment.
  8. Corporation Tax will continue to be charged at 19% until 31/03/2023 for profits up to £50,000. There will be tapering for profits between £50,000 and £250,000 to be announced.
  9. Trading losses arising in tax years 2020/2021 and 2021/2022 for up to £2,000,000 can be carried back for three years. There are some exceptions to be published.
  10. The reduced rate of VAT of 5% for hospitality, holiday accommodation, and attractions is extended to 30/09/2021 after which the rate will increase to 12.5% until 31/03/2022.
  11. Business rates reliefs eligible retail, hospitality and leisure properties will continue to get 100% business rates relief from 1 April 2021 to 30 June 2021 and 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties.
  12. Recovery Loan Scheme From 6 April 2021 this scheme provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million. The scheme will be open to all businesses. This replaces the CBILS and Bounce Back Loan schemes.
  13. Restart Grants of up to £6,000 per premises for non-essential retail businesses. £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
  14. Super-deduction and 50% first-year allowances for companies investing in qualifying new plant and machinery will be able to claim a 130% super-deduction, and special rate assets will attract a 50% first-year allowance between 01/04/2021 and 31/03/2023.
  15. Alcohol, tobacco and fuel duties to be frozen. No extra duties on spirits, wine, cider or beer Fuel duty for eleventh consecutive year.
  16. Stamp duty nil rate band until the end of June on houses up to the value of £500,000.
  17. SDLT temporary rates of £500,000 nil-rate band will remain in place until 30/06/2021, it then will reduce to £250,000 and to £125,000 from 01/10/2021.
  18. Mortgage guarantee introduced for those first time buyers with a 5% deposit. The government will guarantee the remaining 95% of the loan.

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.