Autumn Budget 2021 – How Will it Impact You?

November 19, 2021 10:30 am Published by

Chancellor Rishi Sunak revealed the contents of the Autumn Budget in the House of Commons on 27th October 2021. Setting out his agenda for the year ahead, Mr Sunak said that the plans were focused on a “post-covid” era and would support an “economy of higher wages, higher skills, and rising productivity.”

Here is a summary of some of the key points most likely to affect businesses:

Personal Tax

There were several announced changes to personal tax within the Autumn Budget:

Personal tax allowance

Personal tax allowance is the amount of income you do not have to pay tax on within any given tax year. The standard personal allowance as of tax year 2021/22 is £12,570 yet is less if your income is above £100,000 and non-existent if your annual income exceeds £125,140.

As announced previously, personal tax allowance is to be frozen from April 2022 and will remain at the current 2021/22 standard rate of 12,570 for all tax years up until 2026. This freeze ultimately means that individuals will pay more tax as wage inflation continues to rise.

National Insurance increase

The Government also announced the introduction of a new Health and Social Care levy with the aim of providing a long-term solution to funding Health and Social Care in the UK.

The policy states that there will be a temporary 1.25% increase to National Insurance from April 2022 before returning to its current rate and the added tax being collected as a new Health and Social Care levy from April 2023.

To find out more about the new Health and Social Care Tax and how it will impact your business, read our dedicated blog post.

Minimum wage increase

The National Living Wage (NLW) is set to rise by 6.6% from April 2022. This increase is part of a plan to reach the government’s target of two-thirds of median earnings by 2024 and will support the wages and living standards of low-paid workers at a time when growth is robust across the economy.

The minimum wage is the same across all areas of the UK with the increase set to take effect from 1st April 2022.

 

Current Rate (April 2021)

 

Rate from April 2022

 

Increase %

National Living Wage (23+)  

£8.91

 

£9.50

 

6.6%

Those aged between 21-22  

£8.36

 

£9.18

 

9.8%

Those aged between 18-20  

£6.56

 

£6.83

 

4.1%

Those under 18  

£4.62

 

£4.81

 

4.1%

Apprentice rate  

£4.30

 

£4.81

 

11.9%

The apprentice rate applies to those aged below 19, or those aged 19 or over and in the first year of their apprenticeship. Apprentices are entitled to the minimum wage for their age group if they are aged 19 or over or have completed the first year of their apprenticeship.

Capital Gains Tax on the Sale of Second Properties

Capital Gains Tax (CGT), as the name suggests, is tax on profits made when you sell something that has increased in value since its purchase.

April 2020 saw the deadline for reporting and paying Capital Gains Tax reduced from 9 months, to just 30 days. In this year’s Autumn Budget however, the 30-day deadline for paying CGT on the sale of a second property has been increased to 60 days, a welcome relief for many.

This change will take place with immediate effect and is set to minimise late settlements and reduce consequent interest and penalties that many have faced over the last year.

Corporation Tax

Corporation Tax for all limited companies will increase from 19% to 25% from 1st April 2023. By implementing this increase, the treasury expects to recoup more than £17 billion in 2025/26 tax year, compared to what was collected in 2020/21.

The increase means that if your business has annual profits of more than £250,000 from 2023/24, you must pay the main rate of corporation tax at 25%.

A small profits rate will also be introduced in April 2023 and means that those businesses with annual profits less than £50,000 will continue to pay Corporation Tax at just 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate of 25% reduced by a marginal relief.

Business Rates

The chancellor announced a one year 50% cut in business rates for those in the hospitality, retail, and leisure sectors, with the aim of supporting the UK’s post-pandemic recovery.

Pubs, cinemas, hotels, theatres, and gyms will all be eligible for the tax cut and the reduction in business rates will last until April 2023.The rates relief will amount to almost £1.8 billion and is said to mark the biggest single rate tax cut for companies in 30 years.

Need a Hand?

Understanding changes to legislation can be confusing for both employers and employees. If you are unsure of what the Autumn Budget changes mean for you or your business and need advice from an expert, give one of our team a call today on 0117 379 08 10.

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