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Autumn Budget 2021 – Personal
Autumn Budget 2021 – Personal

 

Rates & Allowances

 

The tax-free personal allowance throughout the UK remains at £12,570 for the 2022/23 tax year. The basic-rate band stays at £37,700, along with the higher-rate threshold at £50,270. The additional-rate band is unchanged at £150,000.

Any changes to the thresholds in Scotland should be announced at the Scottish Budget in December 2021.

The 0% band for the starting rate for savings income is unchanged at £5,000 for the 2022/23 tax year and applies across the UK.

The personal savings allowance will remain at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. The allowance is not available to additional-rate taxpayers.

The transferable marriage allowance stays at £1,260 for the 2022/23 tax year.

 

 

Dividends

 

The dividend allowance remains at £2,000 for 2022/23, however, each of the three tax bands will increase by 1.25%.

From 6 April 2022, the basic rate for dividends will rise to 8.75%, the higher rate will increase to 33.75%, and the additional rate will be 39.35%.

 

 

National Living Wage

 

The national living wage applicable to over-23s increases by 6.6% from £8.91 to £9.50 an hour, from 1st of April 2022.

 

 

National Insurance Contributions

 

The rates at which employees pay class 1 primary contributions and the self-employed pay class 4 National Insurance contributions (NICs) will rise by 1.25%.

From April 2022, the main class 1 NICs rate for employees will increase from 12% to 13.25% and the main class 4 NICs rate for the self-employed will increase from 9% to 10.25%. The higher rates for both class 1 and class 4 NICs will also increase from 2% to 3.25%.

From April 2023, this 1.25% health and social care levy will be formally separated out and at this point, the rates of class 1 and class 4 NICs will return to their 2021/22 levels. The threshold for class 1 and class 4 NICs will rise from £9,568 to £9,880 for 2022/23, while the upper-earnings limit and upper-profits limit will stay at £50,270.

At the same time, the class 2 NICs rate which applies to the self-employed will increase from £3.05 to £3.15 per week, while the self-employed small-profits threshold will rise from £6,515 to £6,725.

 

 

Capital Gains Tax (CGT)

 

The annual CGT exempt amount for individuals of £12,300 and £6,150 for trustees of settlements will be maintained at the current levels up to and including the 2025/26 tax year.

The lifetime limit on qualifying gains for business asset disposal relief will remain at £1m for 2022/23. The lifetime limit for investors’ relief will also be kept at the current level of £10m. The 10% tax rate remains unchanged for both reliefs.

 

 

Capital Gains Tax on UK Property

 

The time limit to report and pay capital gains tax on the disposal of UK residential property will be increased from 30 days to 60 days. This change applies to completion of property sales made on or after 27 October 2021 and will apply to both UK and non-UK residents.

Where a gain arises from a mixed-use property, only the portion of the gain that is residential property should be reported and paid. This measure is only available to UK residents.

ISAs All of the annual subscription limits will be unchanged for 2022/23. For ISAs, this will be £20,000 and for Junior ISAs and child trust funds it will be £9,000.

 

 

Pensions

 

The lifetime allowance for pension savings will remain at £1,073,100 until the 2025/26 tax year.

From 6 April 2028, the normal minimum pension age where savers can access their pensions without incurring an unauthorised tax charge, will rise from 55 to 57 years old.

 

 

Making Tax Digital for income Tax Self-Assessment

 

The requirement for sole traders and landlords with income over £10,000 to prepare for Making Tax Digital (MTD) has been delayed by one year and will now be introduced from 6 April 2024.

General partnerships will not be required to join MTD for income tax self-assessment until 6 April 2025.

 

 

Inheritance Tax

 

The individual nil-rate band will stay at £325,000 and the residence nil-rate band will also remain at £175,000. The taper threshold for the residence nil-rate band continues to start at £2m.

 

 

Basis Period Reform for the Self-Employed

 

Currently, a business’s profit or loss for a tax year is usually the profit or loss for the year up to the accounting date that ends within the tax year, called the ‘basis period’. With effect from 6th of April 2024, a business’s profit or loss for a tax year will be the profit or loss arising in the tax year itself, regardless of its accounting date. This measure removes the basis period rules and prevents any further overlap relief.

On transition to the tax year basis from 6 April 2023, all businesses basis periods will be aligned to the tax year and all outstanding overlap relief given.

Discovery assessments Legislation will be passed to confirm that HMRC may use discovery assessments to recover tax charges relating to the high-income child benefit charge, Gift Aid donations and certain pension charges.

 

 

Need More Info?!

 

If you would like a more in-depth summary of the 2021 Autumn Budget, you can read our exhaustive overview here.

On the other hand, if you would like more information on the budget and its various aspects, you can refer to our main blog page, where you will find a summary post on the 2021 Budget, as well as posts covering VAT, business tax, and duties/other announcements.

 


Contact Gow and Partners

 

If you have any queries regarding Sunak’s Autumn Budget, then please do get in touch with our team of dedicated Gow accountants, who will be more than happy to clarify any aspect that you’re unclear on.

Simply call 01254 589799 today.

Alternatively, you can fill in a contact form, or send us an email at info@gowandpartners.co.uk.