Oct 28, 2021 | JONATHAN ELSIGOOD
Yesterday saw the second Budget of 2021. Rishi Sunak’s alleged pre-speech ritual includes a Twix and a can of Sprite. But did it add any fizz?
As you’ll have noticed, many of Rishi’s spending plans have been heavily trailed in the media as being a budget to support a post covid recovery. Sound bites coming out of number 11 used phrases such as “a new economy” with the “levelling-up” agenda clearly running through it.
So did he deliver? Here’s our take on the areas most likely to be of interest to you.
Once again it was a case of “no news is good news” for business owners and investors, as the Budget mentioned no plans to increase the rates of CGT.
One helpful change is that from 27 October 2021, the deadline for residents to report and pay CGT after selling UK residential property will increase from 30 days to 60 days. This also applies for non-UK residents disposing of property in the UK.
As announced on 7 September 2021, the rates of income tax applicable to dividend income will increase by 1.25% from 6 April 2022. The dividend ordinary rate will be set at 8.75%, the dividend upper rate will be set at 33.75% and the dividend additional rate will be set at 39.35%.
Also previously announced, the complex basis period rules for income tax will be reformed. Sole traders’ / partnerships’ profit or loss for a tax year will be the profit or loss arising in the tax year itself, regardless of its accounting date, removing the need to charge tax on profits twice and the need for overlap relief. The date of this change has been pushed back in line with MTD (more below). The transition will now take place in 2023-2024, and the new rules will come into force from 6 April 2024.
As announced on 23 September 2021, the government will give sole traders and landlords with income over £10,000 an extra year to prepare for Making Tax Digital (MTD) – the new key date is 6 April 2024. General partnerships will not be required to join MTD until 6 April 2025.
Also announced on 23 September 2021, the new penalties for the late submission and late payment of income tax will now come into effect on 6 April 2024 for taxpayers who are required to submit digital quarterly updates through MTD, and 6 April 2025 for all other self-assessment income taxpayers.
The new late submission and late payment penalties for VAT will still come into effect for VAT registered businesses from accounting periods starting on or after 1 April 2022, as announced at Spring Budget 2021.
There will be an increase in the minimum age to draw pension benefits to 57 from 55, effective from 6 April 2028.
No changes were announced to pension tax relief. The speculation that the Chancellor would bring pensions back into a charge to inheritance tax on death, failed to materialise.
As previously announced, the pensions lifetime allowance of £1,073,100 for 2021/22 has been frozen up to and including 2025/26. And the annual allowance for pension contributions remains at £40,000 per tax year, tapering down to just £4,000 where total income in a tax year exceeds £312,000.
ISA limits for 2022/23 remain unchanged at £20,000 and Junior ISAs/ Child Trust Funds at £9,000.
The new NS&I Green Bond announced in the Spring 2021 Budget is now available. Funds raised from the bond will be used towards chosen green projects by the Government. The bond is a 3-year fixed term deposit, paying an interest rate of 0.65% gross per annum and is taxable. The minimum investment is £100, and the maximum £100,000 per person.
Fuel duty rates will remain frozen for 2022 to 2023.
From 6 April 2022, there will be increases to the van benefit charge and the car and van fuel benefit charges by reference to the September 2021 Consumer Price Index.
The government intends to reform alcohol duty so drinks will be taxed in proportion to alcohol content, and the duty rules will be simplified. A consultation will be published on the detail of these reforms, closing on 30 January 2022.
Regular domestic flyers will be pleased to hear of a 50% cut in Air Passenger Duty for flights between airports in England, Scotland, Wales and NI, effective from 1 April 2023.
From the same date, a new ultra-long-haul band of Air Passenger Duty of £91 will apply to flights of 5,500 miles or more.
So, to be honest, not much rising or falling in this Budget. However, as usual there are some key impacts on businesses and individuals. As ever, if you want to discuss anything, simply get in touch.