UK Budget 2021 – A Stronger Economy for the British People
Personal Tax, Pensions and Employment
- The National Living Wage will be increased to £9.50 an hour, effective from 1 April 2022, for individuals aged 23 and over.
- A reduction in the taper rate that applies in Universal Credit from 63% to 55% by 1 December 2021.
- As previously announced on 7 September 2021, a new 1.25% Health & Social Care levy (the Levy), will be introduced and apply to Class 1 and Class 4 National Insurance Contributions, for both main and additional rates. This will initially be introduced from April 2022 as a rise in National Insurance for all working-age employees, employers and the self-employed. From April 2023, once HMRC’s systems are updated, it will be treated as a separate tax and also apply to the earnings of individuals working above State Pension age. NIC rates will return to their 2021-22 levels.
- The dividend rates will also be increased by 1.25% from 6th April 2022, making the ordinary rate 8.75%, the upper rate 33.75% and the additional rate 39.75%.
- The ‘Triple Lock’ for the State Pension has been temporarily suspended, and for 2022-23 only, the increase will be the higher of CPI or 2.5%.
- Annual investment allowance of £1m to be extended to March 2023.
- R&D to be reformed to support modern research methods including data and cloud costs from April 2023. Further details will be announced later in the Autumn.
- Museums and Galleries Exhibition Tax Relief will be extended until 31 March 2024.
- From 27 October 2021 the rates of Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibition Tax Relief (MGETR) will increase:-
- From 27 October 21, the headline rates for the TTR and MGETR will temporarily increase from 20% (for non-touring productions) and 25% (for touring productions) to 45% and 50%, then reduce to 30% and 35% on 1 April 2023, and expiring on 1 April 2024, returning to 20% and 25%.
- For MGTER, the relief will expire on 1 April 2024 and no expenditure from this date will be eligible for relief.
- From 27 October 2021 the rates of Orchestra Tax Relief will increase from 25% to 50%, reducing to 35% from 1 April 2023 and returning to 25% on 1 April 2024.
- Eligible retail, hospitality and leisure sectors will be able to claim a 50% discount on their business rates bills up to £110,000. This is for 2022-23.
- More frequent business rates revaluations to be carried out every three years instead of every five years.
- A freeze in the business rates multiplier for a second year, from 1 April 2022 until 31 March 2023, keeping the multipliers at 49.9p and 51.2p.
- There will also be a 100% improvement relief for occupiers where eligible improvements to an existing property increase the rateable value.
Property & Capital Gains Tax
- A new tax will be introduced from April 2022 on profits that companies make from UK residential property development. This will be charged at 4% on profits exceeding an annual allowance of £25 million. The tax is to target building safety remediation.
- From 27 October 2021, the Capital Gains Tax reporting and payment deadline, after selling UK residential property will increase from 30 days to 60 days after the completion date. This will also include non-UK residents. For mixed-use property disposed of, the 60-day payment window will only include the residential element of the property gain.
- From 6 April 2024 income tax basis periods will be reformed so businesses’ profit or loss for a tax year will be the profit or loss arising in the tax year itself regardless of its accounting date. This will remove the need for overlap relief. The transition to the new rules will take place in 2023-24.
- Making Tax Digital for sole traders and landlords with income over £10,000 will have an extra year to prepare for Making Tax Digital. This will now be introduced from 6 April 2024. General partnerships will not be required to join MTD until 6 April 2025.
- The new points based system for penalties relating to late submission and late payment of tax for Self-Assessment will now come into effect on 6 April 2024 in line with Marking Tax Digital.
- The Recovery Loan Scheme will also be extended until 30 June 2022. Finance will be available up to a maximum of £2 million per business, supporting their recovery and growth following the pandemic.