On Wednesday 27 October the Chancellor of the Exchequer delivered his Autumn Budget. Appropriately close to Halloween was it trick or treat? We present a summary of the major points and we ask is it good or bad? We let you decide.
National Insurance Contributions
|Class||Tax Year 21/22||Tax Year 22/23|
|Class 1 Primary NICs (Employees)||12.00%||13.25%|
|Class 1 Secondary (Employers)||13.80%||15.05%|
|Class 4 Self Employed||09.00%||10.25%|
|Band||Tax Year 21/22||Tax Year 22/23|
|Dividend (Basic Rate Band)||07.50%||08.75%|
|Dividend (Higher Rate Band)||32.50%||33.75%|
|Dividend (Additional Rate Band)||38.15%||39.35%|
In the Budget announcement in March 2021 the Chancellor, Rishi Sunak, said that all income tax thresholds would be frozen until 2026. The Autumn Budget announcement confirmed this would be the case. All income tax rates and thresholds will remain the same as they were in 2021-22, including the personal allowance.
|0 to £12,570||0%|
|£12,571 to £50,270||20%|
|£50,271 to £150,000||40%|
National Living Wage
The Chancellor announced the National Minimum Wage for individuals aged 23 and over will increase to £9.50 per hour from April 2022. The Chancellor predicts that the rise for those on the minimum wage and in full-time employment, will be about a £1,000 a year.
Health and Social Care Levy
The Chancellor introduced a new Health and Social Care Levy which will be ring-fenced for health and social care. To be funded by increases in National Insurance Contributions of 1.25% across the board for all classes including pensioners. From April 2023 it will be legislated separately.
Corporation Tax Rates
The Spring 2021 Budget announced the main Corporation Tax was due to increase from 19% to 25% from 1 April 2023. This main rate of 25% Corporation Tax will apply to companies with profits of £250,000 or more. Companies with profits of £50,000 or less will continue to pay Corporation Tax (CT) at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the marginal rate up to £50,000 and the higher rate on the excess.
Capital Gains Tax (CGT)
Capital Gains Tax (CGT) has not increased and the annual exemption remains the same. Business Asset Disposal Relief (BADR) also remains the same. The Annual Exemption of £12,300 has been frozen until 2025/26.
Inheritance Tax (IHT)
No changes to Inheritance Tax (IHT) were announced by the Chancellor. The current Nil Rate Band of £325,000 has been frozen until April 2026 tax year.
Making Tax Digital for Income Tax
The introduction of a Making Tax Digital (MTD) regime for income tax has been postponed from April 2023 to April 2024.
Annual Investment Allowance (AIA)
Businesses continue to benefit from an Annual Investment Allowance (AIA) and First Year Allowances (FYA) which offer 100% tax relief on qualifying expenditure. The AIA is available on all qualifying expenditure up to an allowance of £200,000. This £200,000 allowance was temporarily increased to £1 Million on the 1st of January 2019 and the Chancellor announced that this will stay in place until March 2023.
Research and Development
Research and Development Tax Relief was introduced by the Government to encourage companies to invest in Research and Development (R&D) to promote investment in new technology and scientific advancement. Companies incurring Research and Development (R&D) expenditure can claim an additional deduction equal to 130% of the costs. This equates to a 230% deduction in arriving at the adjusted profits for tax purposes.