October 2021 Budget overview

In our attempts to be as helpful as possible for our clients, we’ve been scouring the internet and then researching the actual information, the official line, on the HMRC website.

So here’s some of the budget pointers for you, in no particular order and some would say, covering some rather random announcements too, with  a slightly cheeky commentary in places – it’s been intense!!! You have been warned! #SorryNotSorry

 

1. If you’re an adult thinking of training (or retraining) in health and social care or engineering you might be able to access some free level 3 courses, with apparently 24,000 trainee ships a year. This might also be good news if you’ve got a health or social care business and scrabbling around for staff.

 

2. We’re going to be encouraged to take more journeys by bus cycle and on foot, (with a vague nod to greener living) however if you want to fly to your destination within the UK you might see a reduction in air fare as the tax is going to be cut. If however, you want to go long haul, you’ll see an increase to the cost.

 

3. If your business is high tech you are being encouraged to spend on R&D “£20bn in R&D by 2024/25, a record investment to secure the UK’s future as a global science superpower and create high-skill, high-wage jobs across the country.”

 

4. Are you in the arts? Run an art gallery, theatre or a museum? The ‘headline’ tax relief is going to be doubled for the next 18 months to encourage more investment in ‘high quality productions’.

 

5. In the hospitality, retail or leisure sectors? There’s a one year, 50 per cent discount on business rates for hospitality, retail and leisure sectors.

 

6. ‘Supporting Families Programmes’ seems to be a big thing, so expect to start hearing about ‘Family Hubs’, investment in mental health programmes and other initiatives. Apparently.

 

7. Seems if you work in local government or are a contractor supplying them, your role might be more secure as Rishi made a big point about increasing spending to all government departments and local government.

 

8. And expect to hear about ‘Levelling Up’ which is referring to targeting investment in specific regions and towns around the country. We don’t appear to be one of them but I am sure the people of Ashton under Lyme and any mates you’ve got in Donny will be grateful.

 

9. The National Living Wage is increasing by 59p an hour next year. Which will obviously be paid for by businesses. This means the NLW will be £9.50 an hour. For a full time worker, that’s a pay rise worth over £1,000.

 

10. The government are cutting the Universal Credit Taper Rate from 63p to 55p and increasing work allowances by £500 per year ‘to help working families with the cost of living.’

11. We got temporarily excited about this one “After 12 consecutive years of frozen fuel duty rates, the average car driver will save a total of £1,900.” Til we realised he was comparing it to ‘pre 2010 plans’. OK.

 

12. Is Maths your strong point? (here’s something that will interest our John) The government announced a new scheme to help adults with numeracy. Expect to hear about ‘Multiply’ a £560m, three-year plan to improve basic maths skills. (Only kidding Johnny boy).

 

13. Been stocking up on spirits ahead of the mooted increase in tax on spirits? You’ll be relieved to hear (although the same perhaps cannot be said for your liver!) that the expected increase in duty has been shelved for spirits.

14. What’s your tipple? There’s a reallocation of taxes and a simplification of the taxes on alcohol. How will this affect us? Well in a nutshell, if you drink beer or cider (yay!) and lighter drinks such as white wine, rose and Champers you’ll be J and if you drink port or fortified wines you’ll be L

 

15. Is travel your business? The government is going to increase, in April 2022, the vehicle tax for cars, vans, and motorcycles but freeze it for heavy goods vehicles. Obviously still trying to help haulage firms?

 

16. Thinking of getting your teeth done?  The government are planning to “extend the current VAT exemption for dental prostheses supplied by registered dentists and other dental care professionals or dental technicians to imports of dental prostheses by these persons.” OK so this might not apply to many of you – but have YOU seen that reported elsewhere!?! 😉

 

17. Thinking of going into, or already involved with developing residential property? As suggested earlier in the year, the government’s going to introduce a new tax on company profits derived from UK residential property development. The tax will be charged at 4% on profits exceeding an annual allowance of £25 million and will be included in the corporation tax returns of those companies liable to the new tax.

 

18. And linked to this, to help get that money in I guess, they plan to extend the deadline for residents to report and pay Capital Gains Tax (CGT) payment after selling UK residential property 30 days after completion to 60 days.

19. Expect the term ‘tax avoidance’ to be a thing of the past. Of course, we are happy still to talk about tax efficiency and making sure you don’t pay more than you need to. But if you’re involved in any overt schemes to ‘avoid tax’, expect to hear some rumbles in the jungle.

 

20. Thinking of investing? Just so you know, the adult ISA annual subscription limit for 2022 to 2023 will remain unchanged at £20,000.

 

21. Do you run an online business? Heads up, there’s talk afoot of taxes – the government will consult shortly on an Online Sales Tax. The consultation will explore the arguments for and against the introduction of an Online Sales Tax.

 

22. Talking of tax – MTD (Making Tax Digital). Rishi confirmed that the government will give sole traders and landlords with income over £10,000 an extra year to prepare for Making Tax Digital. MTD for ITSA (income tax self assessment) will now be introduced from 6 April 2024. General partnerships will not be required to join MTD for ITSA until 6 April 2025.

 

23. Looking ahead… are you planning on drawing down your pension at 55? You might want to make note of the new changes here. From April 2028 the earliest age people can access their pensions without incurring an ‘unauthorised payments tax charge’ will be 57.

 

And finally, in our summary (which is not EVERYTHING in the budget)

24. Income Tax rates and dividend tax increase

 

Tax year 2021 to 2022	Tax year 2022 to 2023
Basic rate	£1 to £37,700	£1 to £37,700
Higher rate	£37,701 to £150,000	£37,701 to £150,000
Additional rate	Over £150,000	Over £150,000

 

The rates of personal and inheritance tax and the bands (for non dividend income) remain largely unchanged for the next financial year. More info here if you want to check

 

Dividend income will be subject to an increase: to increase the rates of income tax applicable to dividend income by “1.25%”.

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%. The dividend trust rate will also increase to 39.35% to remain in line with the dividend additional rate. The changes will apply UK-wide and will take effect from 6 April 2022.

Yes, you knew that was coming didn’t you?

So no conclusions from us. You will draw your own conclusion based upon how it affects you personally.

If you want to talk about how any of this impacts you and your business, you know where we are!

01763 2578882 or if it’s easier please email David@theaccountancypractice.com

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If you’d like to read the government’s version of events, here’s the link to their budget page on the website!