An enthusiastic Rishi Sunak has announced a package of spending giveaways in the budget, which left you thinking who is going to pay for all of this?
Changes to business rates for those operating in retail, leisure, and hospitality as well as reform to alcohol duty will be welcome to those operating in those sectors. Likewise, reforms to Tonnage tax are positive for shipping companies.
There were no changes to CGT rates or IHT business property relief but subject to some pre-budget speculation. This is good news for those clients who are in the process of a sale or planning to mitigate exposure to IHT.
The main tax aspects, are as follows:
– An extension of the £1m limit on capital expenditure qualifying for Annual Investment Allowance to March 2023.
– Tax relief for museums and galleries will be extended until March 2024 with immediate significant increases in cultural tax reliefs.
– As mentioned previously, the new Residential Property Development Tax will be introduced from 1 April 2022. The surcharge rate will be 4% on profits exceeding £25m.
– No changes to income tax or CGT rates or allowances but deadline for reporting gains on residential property extended from 30 to 60 days for sales completed after budget day.
– No new announcements on IHT and business property relief.
– R&D tax reliefs to be reformed to include expenditure on data and cloud computing with measures introduced to support innovation in the UK.
– Group relief for corporate losses arising in EEA subsidiaries abolished.
– Changes to dividend tax rates from April 2022 confirmed. Rates increase by 1.25% to 8,75%, 33.75% and 39.35%.
– Changes to basis periods for unincorporated entities effective for 2024/25 so regardless of the accounting date the business’s profit or loss will be that arising in the tax year.
– No announcements on pensions lifetime or annual allowances.
– Vehicle excise duties set to rise on cars, vans, and motorcycles from April 2022.
– The flat-rate van benefit charge will increase to £3,600; the multiplier for the car fuel benefit will increase to £25,300; and the flat-rate van fuel benefit charge will increase to £688.
– Further anti-avoidance aimed at promoters of avoidance schemes.
– A 6% increase in Diverted Profits tax from 2023/24.
Haines Watts’ national panel have reviewed the budget, you can read the full report on what it means for business owners here
If you have any queries on the outcome of the Autumn Budget or any further questions, feel free to contact Emma Gartland, Senior Tax Manager at egartland@hwca.com