A few highlights from today’s Budget.
For the second time in a year, the Chancellor, Rishi Sunak, has delivered a Budget, setting out the government’s plans for taxation and spending in the coming period.
In this article, we set out an initial summary of the main tax changes which will affect individuals, along with a few other select highlights, although, of course, anything announced today is subject to parliamentary scrutiny and doesn’t become law until the relevant Finance Bill has been passed. The Chancellor also announced a number of measures not covered by this summary, and the full Budget document can be read here.
Income Tax
- The dividend rate will be increased by 1.25 percentage points from April 2022, in-line with the increase to National Insurance Contributions (“NICs”) (see below).
National Insurance
- As previously announced, NICs will be increased by 1.25 percentage points from April 2022.
- From April 2023 this increase will be rebranded as a separate tax “the Health and Social Care Levy” which will be broadly analogous with National Insurance, although unlike NI it will also apply to earnings of those over the state pension age.
Capital Gains Tax
- The 30-day window for reporting and payment of tax due on residential property sales will be increased to 60 days with immediate effect.
Inheritance Tax
- No change announced.
Stamp Duty Land Tax
- No change announced.
VAT & Duty
- Fuel Duty – planned increase cancelled for next year.
- Vehicle Excise Duty – frozen for HGVs in 22/23.
- Air Passenger Duty – lower rate band for domestic flights introduced.
- Alcohol Duty – planned increase cancelled for next year, and government to consult on reforming and simplifying the duty.
Corporation Tax
- £1m Annual Investment Allowance extended to 31 March 2023.
- Bank surcharge retained at 3% and surcharge allowance raised to £100m.
Business Rates
Review of business rates has been published with various recommendations being implemented including:
- Revaluation every 3 years, instead of every 5.
- New business rates improvement relief – no additional business rates for 12 months on property improvements from April 2023.
- Multiplier increase cancelled for 22/23.
- 50% rate discount for Retail, Hospitality, and Leisure sector up-to maximum of £110,000 in 22/23.
Minimum Wage
- Increased to £9.50 per hour from April 2022 for those aged 23 and over.
Universal Credit
- Taper rate reduced to 55% by no later than 1 December 2021.
- Work allowances increased by £500 per year.
Please do not hesitate to contact us if you would like to discuss how today’s announcements may affect your own position or if you would find it helpful to obtain further advice on these matters.