Important Changes In Autumn Budget

The Chancellor of the Exchequer declared that the 2021 Budget would start the work of preparing a new economy after COVID-19. With a focus on departmental spending increases and investments in infrastructure, what would be the main tax impacts for businesses and individuals?

Apart from a few changes for certain sectors, most businesses will be relieved to know that only minor changes were brought about in corporation tax, income tax and VAT.

Here are some important highlights from the autumn budget.

● Substantial amounts of revenue over the next five years will be increased from previously announced measures, for example, introduction of the Health and Social Care Levy and the freezing of tax allowances.

● From 2024-2025 onwards, the contributions to pension scheme made by individuals by low earning groups will be able to make 20% top up payments under a Net Pay Arrangement HMRC.

● Increase in deadline from 30 days to 60 days after completion for reporting and paying CGT after selling UK residential property from 27 October 2021.

● Restructuring of alcohol duty so that all beverages can be taxed in direct proportion to the strength of the alcohol. Higher the strength of alcohol, more duty will be applicable. Reduction in rates of sparkling wines like champagne but increased rates for red wines and ciders.

● Air passenger duty band to cover flights moving to and from the UK at a rate of £6.50 for 2023 or 2024. A new ultra-long-haul band for flights to destinations with an economy rate of £91 and capitals located more than 5,500 miles from London.

● There will be a revision of the income tax “basis period” so that no matter what the account date is, the profit or loss incurred in a particular tax year itself would be considered as the businesses’ profit or loss for tax year.
● Any expenses in data and cloud are eligible for tax relief and will be considered a qualified expense in R&D.
● Temporary increase in the cultural tax reliefs for orchestras, theaters, and museums for the period upto 31 March 2024 with an exhibition relief. Film tax relief is also introduced from 1 April 2022 that can be claimed where the film is released on streaming platforms rather than in a cinema. Hence, the criteria for high end TV relief is also met.

● Residential property development tax introduced from 1 April 2022 at rate of 4 percent on relevant group profits over £25 million. With a restriction for finance costs, residential property profits will be calculated like corporation tax.

● The banking surcharge will decrease to 3 percent with an allowance of £100 million to help support challenger banks from 1 April 2023 which means that the banking surcharge rate will be lower than the new residential property development tax.

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