Budget Snapshot – Autumn 2021
This is the second Budget in 2021. The first took place on 3 March while the UK was still in lockdown and set the tax framework for the next few years by freezing many tax allowances until April 2026 and announcing increases to corporation tax from April 2023.
Introduction
The Chancellor describes this Budget as not drawing a line under covid but beginning the work of looking to a post-covid economy.
- Charter for Budget Responsibility updated with new fiscal rules
- Underlying public sector net debt should be falling as a percentage of GDP; and
- In normal times the Government should only borrow to invest.
Spending Review 2021
The Spending Review 2021 sets Government departmental budgets up to 2024/2025. Every department’s overall spending will increase in real terms.
Taxes, Pensions and Benefits
- Confirmation of the introduction of the Health and Social Care Levy, the 1.25% increase to Class 1 (employee and employer) and Class 4 (self employed) NI contributions from April 2022. From April 2023 the Levy is to be separated from other NI contributions.
- Confirmation of the 1.25% increase to all dividend tax rates from April 2022.
- Confirmation of the suspension of the State Pension ‘triple lock’ in 2022/2023. State Pensions to be uprated by the higher of CPI or 2.5%.
- National Living Wage to increase to £9.50 an hour from £8.91 an hour from April.
- Universal Credit taper to reduce from 63% to 55% by 1 December 2021.
- CGT property payment window to be extended from 30 to 60 days from today for individuals to report and pay CGT after selling UK residential property.
- Savings starting rate threshold and ISA subscription limits to remain unchanged in 2022/2023.
- Arrangements to be introduced from 2025/2026 to make top-up payments into pensions for low-earning individuals who are in schemes that use the net pay arrangement.
- Consultation to be launched on further changes to the charge cap for DC auto-enrolment pension schemes to enable individuals to benefit from better growth in their long-term investments.
Corporate Taxes
Confirmation of increase to Corporation tax to rise to 25% in April 2023 on profits over £250,000.
Business rates review completed. Changes include freezing of the multiplier, introduction of new reliefs and revaluations to be done every three years.
Excise Duties
- New system of alcohol duties to be introduced in 2023.
- No increase to alcohol or fuel duties.
Levelling Up
First grants announced from the Levelling Up Fund for towns and cities including Stoke, Leeds, Doncaster and Leicester.
Infrastructure
- Increased investment to support London-style public transport across English regions.
- Increased investment in roads and railways to improve journey times between cities.
If you wish to discuss how the budget impacts you or for any financial needs or questions, please get in touch.
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