This appears to be the line taken by the press in response to Rishi Sunak’s budget speech. The 64 minutes of the speech certainly packed in a great deal of optimism on the future of the economy. Much was made of infrastructure changes and investments in relief and innovation with a stated aim to reduce taxes by the end of this Parliament.
Reviewing the formal budget documents afterwards reveals next to nothing in terms of direct tax announcements with much of what there is being promises of further details shortly. There was a recognition that the 30 days for reporting and paying capital gains tax on real estate is impractical, and this has, therefore, been extended to 60 days for completions from 27 October 2021 onwards. Alison Palmer comments further on the implications separately click here to read more from Alison. This was the only direct tax announcement affecting individuals.
However, there was confirmation of further detail on the social care levy affecting individuals, companies and employers. The levy increases the rates of tax on dividends by 1.25 percentage points from 6 April 2022, in line with the charges on employment and self-employment income. This applies to all individuals and Trustees. For companies, the loans to participators charges will also increase to 33.75%.
There was a little more substance for companies with changes to the R&D tax credits intended to expand the base to include cloud and data innovations but also to focus on innovation originating in the UK. Full details are not yet available, so watch this space.
Similarly, to stimulate investment the Annual Investment Allowance (which is also available for unincorporated businesses) has been extended and Mark Baxter’s comments on this are here.
Significant changes to the business rates regime for the hospitality, retail and leisure sectors were proposed and Andy Turner will be looking at the impact of those. Please click here.
Away from direct taxes, there was confirmation of the “pre-announced” increase in the national living wage to £9.50 per hour and a reduction in the universal credit taper, so that recipients may keep more of their earnings. The intention is to ensure this is operational before 1 December 2021.
Our Financial Planning Director, Michael Lapham, looks at pension charges and authorised investments and considers other pension news from today’s announcement, please read Michael’s article here.
Fuel duty has not been increased which is likely to be welcome. When it’s time to leave the car at home, alcohol duties have been reformed from the 1643 template and there will now be a reduced number of bands so that the stronger the drink, the higher the tax. As a further encouragement to the hospitality sector craft brewers’ reliefs were also modified and duty on draught beers was reduced. The resultant reduction in the rate of duty on Prosecco (and all fizzy wines!) will generate rather more interest than this budget from a tax technical point of view. We know the devil is in the detail and we will update and support our clients when new announcements are released in the coming months.