Chancellor Rishi Sunak delivered his Autumn Budget speech last month, but rather than increasing taxes, he decided to go in a different direction to what many had predicted, including ourselves.
We detailed the key changes and announcements in our Autumn Budget 2021 booklet, so make sure to read that for a full analysis.
If you’re pressed for time, however, or just want to know what you absolutely need to, read on for our quick summary of Autumn Budget 2021.
R&D tax credit changes
High on Sunak’s agenda was the changes to R&D credits to get Government spending on R&D up from £7.4 billion in 2019/20 to £20bn by 2024/25, a step closer to the Government’s goal of getting R&D spending to £22bn by 2026/27.
The Chancellor mentioned two main policy proposals to help achieve this, the first of which included expanding the scope of R&D relief to include cloud computing and data costs to “reflect how businesses conduct research in the modern world”.
The second, in Sunak’s words, is to “incentivise greater investment here at home” given that around half of all R&D tax relief is currently going to overseas businesses that aren’t actually investing in the UK, but are nevertheless reaping the rewards of the UK’s R&D tax credit scheme.
Capital gains allowances and reporting
The annual capital gains tax allowances were unchanged, remaining at £12,300 for businesses and individuals, and £6,150 for trusts. But we already knew that from this year’s Spring Budget back in March.
A key change was made to the capital gains tax property payment window, however, which extended the deadline for residents to report and pay tax on any gains after selling additional UK residential property from 30 to 60 days.
For non-UK residents disposing of property in the UK, the deadline will also increase from 30 to 60 days.
“This will ensure taxpayers have sufficient time to report and pay capital gains tax as recommended by the Office of Tax simplification”, the Treasury explained in the full Autumn Budget document.
While it may seem like a minor change to the tax system, it’s one that should benefit taxpayers and the Treasury alike, given how between 6 April 2020 and 6 January 2021, one in three property tax returns were filed later than the 30-day window, according to HMRC.
What does the Budget mean for motorists?
Announcing the planned rise in fuel duty for next year has been scrapped, Sunak froze fuel duty for the 12th year in a row at 57.95p this Budget, saving motorists around £1,900 in 2022/23.
Specifically, according to the Chancellor’s figures, the average tank of fuel will cost around £15 less per car; £30 less for vans, and £130 for HGVs compared to pre-2010 plans.
The Government also used the Budget to reiterate its pledge of an extra £350m to support the electrification of UK vehicles and supply chains, as well as an extra £620m for electric car grants and infrastructure.
As announced at Budget 2020, the Government also confirmed company car tax rates announced for 2022/23 will remain frozen until 2024/25.
National Insurance and dividends
Announced ahead of time on 7 September 2021, the Autumn Budget set in stone tax rises to National Insurance contributions (NICs) and dividends to fund the development of a new ‘health and social care levy’.
Employees and the self-employed will initially see their NICs and dividend tax rates increase by 1.25% from April 2022.
From April 2023, this rate will remain in place but will appear on pay slips as a 1.25% health and social care levy, meaning state pensioners who continue work beyond their state pension age will have to pay the tax, too.
Employees currently pay 12% in Class 1 NICs on earnings between £9,568 and £50,270 in the 2021/22 tax year, and 2% on earnings above that, while employers pay a flat rate of 13.8%.
Dividend tax, on the other hand, is aligned with the income tax thresholds but the dividend tax rates are lower. In 2021/22, they are:
- basic rate: 7.5%
- higher rate: 32.5%
- additional rate: 38.1%
Bear in mind that NICs and dividend tax rates increasing 1.25 percentage points is not the same thing as paying 1.25% more in taxes.
As such, you can expect your NIC payments and basic-rate dividend taxes to increase by around 10% and 15% respectively.
Talk to us about your tax planning.