Autumn Budget 2021

27 October 2021

The Chancellor has today announced the Autumn Budget and this was always expected to be more of a spending review than a traditional Budget and indeed even in the footnotes there were few surprises that were not already known.

Taxation of dividends

With regard to income tax there was the confirmation from the announcement last month that the dividend tax rates were to increase by 1.25%. This will take effect from 6 April 2022 and results in the following increases:

  • Basic rate increases from 7.5% to 8.75%
  • Higher rate increases from 32.5% to 33.75%
  • Additional rate increases from 38.1% to 39.35%

Reporting of property disposals for capital gains tax

Since April 2020, where individuals, trusts and estates who are resident in the UK have disposed of UK residential property and capital gains tax is due, they have had to report it to HMRC within 30 days of the date of completion and pay the tax due. Previously the disposal would just have been included on the self-assessment return after the end of the tax year.

Further non-UK residents were required to also report disposals of any UK land and regardless of whether there was tax due.

Slightly unexpected, but certainly welcomed is the measure advising that for those property disposals completing on or after 27 October 2021 the 30 days reporting deadline has been increased to 60 days.

Power to make temporary modification of taxation of employment income

Before Covid working from home tended to be discouraged. However, the pandemic and the requirement to work from home meant that previously little used potential tax breaks were suddenly not just highlighted but actively promoted. The most notable one was claiming £6 a week relief where employees were required to work from home. Further this relief was given increased flexibility from the first lockdown (indeed this can still be claimed for 2020/21 and 2021/22). Nevertheless the pandemic highlighted the limited scope the current system has to make changes and respond quickly.

This measure furthers this to enable the Treasury to make temporary modifications at short notice in the event of an emergency. The aim is to support businesses / taxpayers, for example, by potentially:

  • Exempting some benefits in kind
  • Exempting specific reimbursements
  • Providing relief for specified expenses

The Treasury is not planning to use this at the moment, but rather knowing it has the power to adapt quickly if a situation changes.

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