Budget Spotlight 2021

Budget
Oct
27
Posted 2021 by Jane Loxton

Our summary of the key points from the October Budget

  • Residential Property Developers Tax (RPDT) confirmed for large corporate property developers on profits in excess of £25m at a rate of 4% from 1 April 2022. This is billed as a Building Safety Levy to include paying to remove dangerous cladding from the riskiest of sites.
  • R&D relief remains and investment in innovation is set to increase to 1.1% GDP, although now subject to the PAYE/NIC cap, legislation will restrict R&D tax relief to eligible costs incurred in the UK but will allow cloud computing and data costs.
  • Annual allowance will be maintained at £1m until earliest March 2023, and the superdeduction for capital allowances announced in the March 2021 Budget will remain available until April 2023.
  • Business rates remain substantially unreformed, but there will be a new investment relief for green technology costs incurred in respect of premises, to delay the effects of the increase in value on business rates. The business rates multiplier, which was set to increase in 2022, will not be increased. Properties will be revalued every 3yrs for business rates purposes.
  • Retail, hospitality, and leisure sectors will be eligible to claim a 50% reduction in business rates (subject to a cap of £110,000). Small business rates relief will remain available.
  • Alcohol duties will be reduced for drinks with lower alcohol volumes but increase for those with higher percentages. Small craft producers will benefit from some relief from duties. Sparkling wines will no longer be subject to a ‘duty premium’ but instead will fall into line with other wines. Draught beers and ciders will be subject to a lower rate of duty from February 2023 in a bid to give a boost to pubs and other social community venues serving those drinks. Planned increases in alcohol duty otherwise notified are frozen for now.
  • Fuel duty is frozen.
  • National Living Wage will increase from £8.61 p/hr to £9.50 p/hr.
  • Universal credit tapering rate is to be cut from 63% to 55% by latest 1 December 2021, ‘making work pay’ for those working whilst in receipt of support.

Previously announced:

  • Temporary increase to NICs for the employed and self-employed of 1.25% and to employers NICs of 1.25% from 1 April 2022 and then via a Health and Social Care Levy from April 2023
  • The Health and Social Care Levy will then apply to a wider definition of income than NIC does currently, to include dividend income and to include earned income of those over state pension age
  • Increases to corporation tax to top rate of 25%, with relief tapering that rate to 19% for profits between £50,000 and £250,000, from 1 April 2023 (currently 19%).

Next steps

As always, should you have any questions relating to the budget announcements and how it will affect you, please do get in touch.