Not so long ago there were two fiscal events per year, a Budget and a spring statement/autumn statement. Having abolished this approach in favour of a single fiscal announcement each year I suppose the Government could hardly re-use the language of autumn statement, and so it was I sat listening to the spending pledges and OBR findings wondering when the Chancellor would get to the tax stuff I was waiting to hear about.
The answer, it seems, is autumn 2022 as the speech was remarkably light on direct tax policy.
Accordingly I’ve abandoned my usual post budget approach of picking my ‘top 5 eye-catchers’ in favour of a sentence or two on pretty well all the direct tax announcements:
Annual Investment Allowance – set to reduce from £1m to £200k on New Year’s Day 2022, this generous year one relief for businesses investing in plant and machinery has been given another 15 month extension, now ending April 2023.
R&D Relief – alongside increased spending on R&D outside of the tax relief programmes, two changes to tax relief were announced. A widening, by allowing cloud costs and data costs to be included in claims, but a narrowing in excluding R&D contracted to workers outside the UK. There are no details as yet, the changes taking effect in April 2023.
30 Day Capital Gains Tax – for the last year and a half there has been an obligation to report certain property gains (UK residential property gains, and all forms of property gains made by non UK tax residents) within 30 days of completion. For completions taking place on or after 27 October 2021 the deadline is extended to 60 days.
Basis Period Reform – announced in the summer 2021, this was intended to take effect from April 2022. It was then announced that a year’s delay would be effected and many of the professional bodies in our industry are calling for more time as too many questions remain unanswered. Notwithstanding, the government have announced that Finance Bill 2021/22 will bring forward the new rules, in readiness for implementation in just under 18 months’ time.
This is a major change for unincorporated businesses, and something we’ll be publishing further detail on in standalone.
Dividend Tax – another already known but now published policy is the increase in dividend tax rates from April 2022, as part of the social care levy announcements from earlier this year. They will become 8.75% (basic rate) 33.75% (higher rate) and 39.35% (additional rate) from the start of next tax year.
Cultural Reliefs – applying to corporation tax paid by museums, theatres, galleries etc, have both been given a 2 year stay of execution to April 2024 and a doubling in the rate of relief until April 2023 (with a year’s taper back to normal rates by April 2024). Generous and no doubt welcome in those industries, but adding complexity with multiple rates of relief dictated by start date.
Larger Company Measures – a couple of announcements were also made likely to be relevant to very large corporate groups. A residential property developer’s tax at 4%, but only payable on residential developers with profits in excess of £25m. And a removal of the ability to claim group relief for losses generated by group companies outside the UK but within the EEA.
The next step
From a direct tax point of view, that was about it. If you’d like to understand how these issues affect your personal or business situation please contact your usual usual UHY adviser.
