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The Autumn Budget and how it may affect you...

The Autumn Budget and how it may affect you...

There has been much speculation on how the Government will fix the public finances in the “post-Covid” era.

However, with a backdrop of a far brighter economic outlook than was originally forecast, this Budget has not introduced major tax reforms.

But what does the Budget mean for you, your personal affairs, or your business?

The key announcements from the Autumn Budget 2021 can be summarised as follows:

Businesses

Enhancing Research & Development (“R&D) Tax Reliefs

From April 2023, the scope of costs on which R&D credits can be claimed has been expanded to include cloud computing and data costs. New rules will also come into effect to restrict the availability of R&D credits on expenditure incurred overseas so only activity carried out in the UK is incentivised.

Further details on these reforms will be published in the coming months, but this expansion on the amount of qualifying R&D expenditure companies can claim is welcome.

Annual Investment Allowance (“AIA”) – temporary increase extended to March 2023

The AIA, a 100% capital allowance that companies and unincorporated businesses can claim in respect of expenditure on eligible plant and machinery, will remain at £1m per annum through to March 2023, previously this extension was due to end on 31 December 2021. It should be noted that the more favourable 130% “Super Deduction” is also available on expenditure on plant and machinery through to the same date.

If your business is thinking about incurring significant capital expenditure we will be pleased to explain the tax incentives for you.

Business Rates & Other Tax Changes

Eligible businesses in the retail, hospitality and leisure sectors will benefit from a 50% discount on their business rates for 2022-23, up to a maximum of £110,000.

Numerous changes have been announced in respect of duties on alcohol, higher strength alcoholic drinks will attract higher duties and lower strength drinks will attract lower tax rates. Draught Relief and Small Brewers’ Relief will be introduced to encourage small scale brewers and pubs.

HMRC continue to provide more details of the new Plastic Packaging Tax intended to commence from 1 April 2022. This will be a tax on plastic packaging manufactured in, or imported into the UK (including packaging already containing goods), where the plastic used in its manufacture contains less than 30% recycled plastic. The tax will be charged at £200 per tonne. Where 30% or more recycled plastic is used, no tax will be due.

There will be a requirement to register for the tax if a business manufactures or imports ten or more tonnes of plastic packaging over a 12-month period, regardless of whether there is a tax liability.

Individuals

Capital Gains Tax reporting on disposal of UK residential property - deadline extended

From 27 October, individuals, trustees, and personal representatives will now have 60 days from completion to report a disposal of UK residential property and pay any CGT due. Previously this deadline was 30 days.

This provides some breathing space to gather the relevant information, calculate, report and pay any tax due on disposal.

If you are considering disposing UK of residential property, please let us know and we can assist with the preparation and submission of the CGT return.

Basis Period Reform

As highlighted in our September article here, the Government is planning to reform how sole traders and individuals in partnerships are taxed.

These changes will be implemented from 6 April 2024, with a transitional year to facilitate this commencing from 6 April 2023.

This is a major change that would affect any sole trade or partnership business that doesn’t prepare its accounts to 31 March or 5 April, leading to income tax liabilities becoming due sooner than under the current basis.

This may be a catalyst for some businesses to consider the commercial and tax implications of moving to a limited company structure – please let us know if you would like to discuss this in more detail.

National Insurance and Dividend Tax Rises

As announced in September, there will be a temporary 1.25% increase in National Insurance Contributions (‘NIC’) from April 2022 for both Class 1 (employee and employer) and Class 4 (self-employed).

From April 2023, the NIC rates will revert to current levels and a new Health and Social Care Tax Levy of 1.25% will be implemented.

In addition, the income tax payable on dividends is to increase by 1.25% from 6 April 2022 so, if there is already a plan in place to pay dividends after this date, consideration should be given to making the payments before 6 April.

If you consider any of the Budget announcements potentially affect your ‘Big Picture’ plans, please get in touch with your usual Creaseys contact and we would be pleased to discuss the implications and opportunities with you.