Submitted by Sestini & Co
| on Mon, 11/01/2021 - 9:19 | In Budget
, Tax planning and pensions
Chancellor Rishi Sunak in the 27th October Budget freely acknowledged that taxes are at their highest for 70 years, but pledged to cut them against a backdrop of positive news from the OBR calculating that the economy will hit pre-Covid levels by the end of 2021, and that the economy is expected to grow by 6% in 2022.
“By the end of this Parliament, I want taxes to be going down not up,” he said.
We’ve highlighted below key tax points from this Budget announcement.
If you’d like to discuss any of the changes and how they might affect you, please contact us on firstname.lastname@example.org or call 01761 241 861.
Tax measures for businesses
- Business rates
Business rates will be cut by 50% for retail, hospitality and leisure for one year up to a maximum of £110,000; from 2023 businesses that make improvements to properties will have 12 months grace before they need to pay a higher business rate on those improvements
- Extension of super deduction
This has been extended til March 2023 meaning that companies can claim 130% capital allowances on qualifying plant and machinery investments. With the super deduction, for every pound a company invests, their taxes are cut by up to 25p.
- Annual Investment Allowance
This will continue to provide 100% relief for plant and machinery investments up to a £1million threshold until March 2023.
- Relief on renewable energy
A new investment relief to encourage businesses to adopt green technologies like solar panels is being introduced.
- R&D tax credits
These are being made more UK-centric, with R&D taking place within the domestic environment to be a requirement from April 2023. The scope will be widened to include cloud computing and data.
- Extended spend on R&D in the UK
R&D investment is set to grow to £22bn by 2026/27, with notable increases going to core science funding and Innovate UK’s budget. A new fund to support transformative economic activity in sectors like life sciences was announced: the £1.4bn Global Britain Investment Fund.
- Scale-up Visa
This new visa is planned for launch early in 2022, to help workers with specialist skills such as tech and knowledge economy to access the UK jobs market.
- Investment into skills and training
A number of upskilling measures were reinforced, including additional funding for the Multiply scheme for maths skills for adults.
- The UK Infrastructure Bank
This has made its first investment, loaning £107m to the Teeside green energy hub.
- Corporation tax
No changes to the measures introduced previously, viz:
From April 2023, the smallest businesses, with profits of £50,000 or less will pay a Small Profits Tax at the current rate of 19%. The Chancellor estimates that 70% of companies will be unaffected by the change and will fall into the Small Profits category. Businesses with profits of over £50,000 will pay higher rates based on a taper system with businesses with profits over £250,000 paying 25% corporation tax (around 10% of businesses).
VAT rate and thresholds are to remain as-is; the special rate for leisure and hospitality is closing as planned.
Personal tax measures
- Reduction in air passenger tax on domestic flights within the UK
APT between England, Wales, Scotland and Northern Ireland is to be reduced by 50%.
- Long haul flights
A new ultra-long-haul APT rate is being introduced, starting at £13 for journeys up to 2,000 miles, with a maximum of £91 for journeys over 5,500 miles.
- Fuel duty
Fuel duty has again been frozen
- Alcohol duties
The alcohol duty system has been simplified, from 15 bands to 6. Those beverages with higher alcohol percentages will be charged the higher rates of tax. Tax on draught beer will fall by 3p a pint under the new measures, and tax on sparkling wines will also reduce.
- Buy to let investors
The capital gains reporting window for landlords on the sale of property is being extended from 30 days to 60 days.
Low earners will now receive tax relief on their pension savings.