Key points of the Autumn budget announced by Rishi Sunak includes the increase in state pension by 3.1% 2022/23, the change in duty tax on alcohol seeing higher duty tax rates on spirits and the clamping down of tax avoidance promoters.
1. Pensions
The state pension will rise in 2022/23 by 3.1% which may see some pensioners receiving an annual boost of £289.
2. Minimum Wage increases
The National Minimum wage will rise from £8.91 to £9.50 from 1st April 2022 for those 23 years and over.
3. National Insurance increase
A 1.25 percentage point rise to the National Insurance contributions from September 2021. Dividend tax rates will also increase by 1.25 points for earnings over £2000.
4. Annual Investment Allowance – AIA
The £1 millian Annual Investment Allowance limit is now extended to 31 March 2023. It was due to revert to £200,000 from 1st January 2022.
5. Alcohol Duties
The changes to the alcohol duties regime in today’s budget will be welcomed by most beer and wine drinkers and the hospitality industry in general.
However, while these changes will result in a small reduction to wine and beer prices – particularly in our pubs – through the reduction in alcohol duties, the reality is that this drop in alcohol duties will not be seen by the general public. Rather, costs in beer, cider, and wine prices in pubs, will increase because of the 6.6% increase in the National Minimum Wage and the already announced increase in employer NIC charges to 15.05% from April 2023.
– Robert Salter, Director, Blick Rothenberg
6. Stamp Duty Land Tax
There were no changes announced to Stamp Duty Land Tax. The tax bands, rates and reliefs will continue to operate unchanged. Next year’s charges for the tax’s cousin, the annual tax on enveloped dwellings, were published, but they merely track inflation and were expected. Those hoping for major changes to the tax, another “holiday” from it, a new relief for zero-carbon homes or new tax rules for shared-ownership schemes, will have to wait.
– Sean Randall, Stamp Duty Partner, Blick Rothenberg
7. Tax reliefs for businesses investing in freeports
Legislation is expected to be published in two days’ time formally designating the eight sites that will qualify for tax reliefs for businesses investing in freeports. More legislation is expected in November to “switch on” the tax reliefs. The tax reliefs include an enhanced capital allowance, a full relief from Stamp Duty Land Tax and full business rates relief. This announcement is only an update to the timing of the freeport tax site designation process. Provision was made in this year’s Finance Act for the reliefs.
– Sean Randall, Stamp Duty Partner, Blick Rothenberg
8. Tax avoidance schemes
The Government has reiterated its commitment to clamping down on promoters of tax avoidance schemes, an area which has proved to have significant problems in the past, not least because many of the promoters are based offshore. The announcement that a new penalty will be introduced in Finance Bill 2021-2022 on UK entities supporting promoters is therefore welcome, since it should mean that it is less easy for promoters to bring their products to the attention of the UK public.
It is also helpful that the Finance Bill will contain measures to share more information with the general public to enable taxpayers to recognise avoidance schemes and steer clear of them. Previously there has been a lack of readily available information and many taxpayers have become involved in such schemes thinking that they were wholly legitimate – based purely on what the promoters have told them.
– Fiona Fernie, Partner, Blick Rothenberg
Budget overview from the CEO of leading tax and advisory firm Blick Rothenberg
Nimesh Shah, Blick Rothenberg CEO said:
“ It was a Budget about managing the rising costs of living, under the threat of interest rate increases, and more infrastructure investment for the economy. Despite yesterday’s speech practice, it was an underwhelming Autumn Budget statement from the Chancellor, Rishi Sunak.
“The government had tactically already announced the Health and Social Care Levy last month – alongside the March Budget announcement to freeze personal allowances for the next 5 years, working families will be worse-off from next April. A family of four with one working parent earning £62,000 will be £649 worse-off per annum in 2022/23 than 2010/11 with changes to rates, allowances, and thresholds.
“There was some limited respite for families – freezing of fuel duty, an increase to the National Living Wage to £9.50 and a change to the mechanism for tapering universal credit, but it doesn’t go far enough, especially with a 1.25% increase to National Insurance coming next April.
“There was some relief for businesses – an extension of the annual investment allowance, which has become customary practice, a broadening of qualifying expenditure for R&D tax relief and a business rates discount for businesses in the tourism, hospitality and leisure sector.
“The time the Chancellor spent talking about niche taxes during his speech highlighted that he had run out of things to talk about – reform to tonnage tax, air passenger duty and alcohol duty have never had so much attention, yet no mention of income tax, National Insurance and VAT (the big 3 tax revenue raisers).
“Rishi Sunak wants to be a Chancellor that reduces taxes, but we have heard that before, and the Chancellor has not hidden his desire for fiscal responsibility against the backdrop of the £300 billion cost of the pandemic and £2 trillion of national debt. The next Budget will be critical and the Chancellor may finally deliver on an increase to capital gains tax, a reform of inheritance tax and revisit the report on a new wealth tax.”
