Home Finance Comment on the Autumn Budget 2021
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Comment on the Autumn Budget 2021

by jcp
gawdo

By Tim Crook- Gherson Solicitors

The Chancellor of the Exchequer, Rishi Sunak, presented his long-awaited Autumn Budget on 27 October, 2021.

He has the unenviable task of working out how to pay for the cost of the Covid-19 pandemic whilst at the same time stimulating the economy and encouraging growth.

There was much speculation beforehand about what might be announced, including possible tax rises.  However, in the end, the announcements focussed mainly on spending.

The possibility of an increase in Capital Gains Tax (CGT) rates has been discussed for a while now.  The current top rate is 20% (28% for residential property) compared to the current top rate of income tax of 45%.  An increase in CGT rates so that they were more in line with income tax rates was therefore thought to be on the cards.

Major changes to the way Inheritance Tax (IHT) is levied in the UK has also been considered following the publication of a report on the subject by the All-party Parliamentary Group last year.  Though it was not expected that wholesale changes would be announced in the Autumn Budget, some tinkering with exemptions and reliefs was thought a possibility.

Finally, reductions in the annual and lifetime pension allowances for income tax was also thought an option.

None of this transpired in the end and no changes to pension allowances, IHT or CGT were announced.  An increase in the minimum wage (to £9.50 per hour for employees aged 23 years and over) from 1 April 2022 and some changes to Universal Credit were announced and these changes should benefit lower earners.

However, this all needs to be seen in the context of the major changes that have already been announced this year.  By far the most significant of these is the 1.25% increase in National Insurance for both employees and employers to fund the NHS and social care which will come into effect from 6 April 2022 (before becoming a separate Health and Social Care Levy from 6 April 2023).  This will hit the pockets of the majority of workers and their employers.

A 1.25% increase to dividend tax was also announced at the same time in September.From 6 April 2022 the basic rate dividend tax will increase to 8.75%, the higher rate dividend tax will increase to 33.75% and the additional rate dividend tax will increase to 39.35%.

A ‘Green Budget’ ahead of COP26 was expected but little was announced on that front other than the introduction of a new investment relief to encourage businesses to adopt green technologies like solar panels.

Rishi Sunak did announce some reforms to air passenger duty.  Flights between airports in England, Scotland, Wales and Northern Ireland will from April 2023 be subject to a new lower rate of Air Passenger Duty.Howeverfrom April 2023, a new ultra long haul band in air passenger duty – covering flights of over 5,500 miles, with an economy rate of £91 will also be introduced.  This on the one hand seems to encourage domestic air travel which doesn’t sound very ‘green’ but on the other hand discourages ultra long haul air travel which does.

There was also good news for both drivers and drinkers – the planned fuel duty rise will be cancelled and steps will be taken to deliver the most radical simplification of alcohol duties for over 140 years.

The Chancellor explained that the new system will be designed around a common-sense principle: the stronger the drink, the higher the rate. Sparkling wines – wherever they are produced – will now pay the same duty as still wines of equivalent strength rather than the duty premium of 28% that they currently pay.  He also announced “draught relief” – a new, lower rate of duty on draught beer and cider – which will particularly benefit community pubs who do 75% of their trade on draught.

The Chancellor finished his speech by stating that:

“My goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down not up. I want this to be a society that rewards energy, ingenuity and inventiveness. A society that rewards work.”

In summary, other than the pre-announced Health and Social Care Levy and increase in dividend tax rates, there were no major tax changes announced and the emphasis was on spending.

www.gawdo.com

You may also like