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Autumn Budget 2021: Private Client Spotlight

The Chancellor of the Exchequer, Rishi Sunak, delivered his Autumn Budget to Parliament on 27 October. Buoyed by better-than-expected growth forecasts, the Chancellor declared his intention to build “an economy fit for a new age of optimism” as he announced the biggest increase in public spending for a decade. The Chancellor’s budget is perhaps more significant for what it did not address, and taxpayers will be breathing a sigh of relief that much mooted reforms to capital gains tax and inheritance tax did not materialise. Nor was there any mention of a wealth tax.

Despite the declaration that “everyday spending must be paid for through taxation”, the Autumn Budget did not include any immediate tax rate rises, although the Chancellor did confirm certain rises that had already been announced. The fact that most tax thresholds, allowances and exemptions have (yet again) been frozen also means that there will be an increased tax take.

The Chancellor acknowledged that the tax burden is now at its highest level since the 1950s and declared that it was his goal to reduce taxes by the end of this Parliament.  

There was good news for the Arts (with creative tax reliefs extended to 2024 and substantial investment in museums, galleries and libraries announced) and the hospitality industry (with the introduction of a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors).

Further detail:

Capital Gains Tax (CGT):

  • The deadline for reporting and paying CGT on the disposal of residential property (by both resident and non-UK resident individuals) is increased from 30 to 60 days.
  • The annual exempt amount will remain at its current level (£12,300 for individuals and personal representatives; £6,125 for most trustees).

Income Tax:

  • An individual’s Personal Allowance and higher rate tax threshold will remain at £12,750 and £50,270.
  • The Lifetime Allowance for pensions will be frozen at £1,073,100.

As previously announced:

  • Dividend rates will increase by 1.25% (the ordinary rate up to 8.75%, the upper rate to 33.75% and the additional rate/trust rate to 39.35%).
  • Employee and employer National Insurance contributions (NICs) will increase by 1.25% (which will be reversed from April 2023, with the introduction of the new Social Care Levy).
  • Other forms of income, such as those from pensions and property are not affected.

Inheritance Tax (IHT):

  • The current rates (20% lifetime; 40% on death), the Nil Rate Band and the Residence Nil Rate Band remain frozen.

Indirect taxes:

  • VAT remains frozen.

Annual Tax on Enveloped Dwellings (ATED):

  • The ATED annual charges will rise by 3.1% from 1 April 2022 in line with the September 2021 Consumer Prices Index.

Residential property developer tax:

  • This new tax on company profits derived from UK residential property development will apply from 1 April 2022 to profits arising from residential property development. The tax will be charged at 4% on profits exceeding an annual allowance of £25 million.

Scale Up visa:

  • The Chancellor confirmed the introduction of a new “Scale-Up Visa”, to help make it quicker and easier for fast-growing businesses to bring in highly-skilled individuals. The new visa will launch in spring 2022 and will be open to applicants who pass the language proficiency requirement and have a high-skilled job offer from an eligible business with a salary of at least £33,000.

If you would like further information please get in touch with your usual contact at Maurice Turnor Gardner or email info@mtgllp.com.

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