Autumn 2021 UK Budget – Individuals

No Changes to UK Income Tax Rates and Personal Allowances Frozen

The basic rate of UK income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.

As previously announced in the UK March 2021 Budget, the personal allowance and UK higher rate threshold have been frozen at £12,570 and £50,270 until 2025/2026.

The 2022/2023 Scottish Budget is scheduled for 9 December 2021 and we will learn then what the Scottish Government’s plans are for the Scottish rates of income tax and thresholds.

 Starting rate for savings tax band  

The band of savings income that is subject to the 0% starting tax rate will remain at its current level of £5,000 for 2022/2023.

The Health and Social Care Levy  and increase in Dividend tax rates 

As announced on 7 September 2021 and detailed in our earlier blog, the UK Government has legislated for a new 1.25%  Levy to fund investment in the NHS and social care.

The Levy will  be introduced from April 2022 and will apply UK-wide to  Class 1 (Employee, Employer) and Class 4 (Self-Employed) National Insurance contributions (NICs) and to the main and additional rates. The Levy will not apply to Class 2 NICs or Class 3 NICs.

From April 2023 the 1.25% levy will also apply to the earnings of individuals working above State Pension age.

In addition, from April 2022, the income tax rates on dividends will also increase by 1.25%.

https://jsca.co.uk/new-health-and-social-care-levy/

Capital Gains Tax : UK residential property payment window 

For property disposals completing on or after 27 October 2021 the deadline for UK residents and non-residents to report and pay Capital Gains Tax after selling UK residential property  increased from 30 days after the completion date to 60 days.

When mixed-use property is disposed of by UK residents, legislation will be changed to clarify that the 60 day payment window will only apply to the residential element of any UK property gain.

National Insurance contributions (NICs) rates and thresholds

National Insurance rates and thresholds will increase by 3.1% for 2022/2023.  This excludes the Upper Earnings Limit and Upper Profits Limit which will be maintained at current levels in line with the UK higher rate threshold for income tax.

Pension Tax Relief Unchanged

There was much speculation that the Chancellor would restrict the tax relief for saving into a pension to basic rate only. This did not happen and the key limits are unchanged.

The annual pension input limit for most taxpayers remains at £40,000 which covers both individual and employer contributions.

The lifetime pension allowance which dictates the size of the individual’s fund has been frozen at £1,073,100.

Inheritance Tax Unchanged

Despite advance speculation there were no changes announced to Inheritance Tax

Individual Savings Account (ISA) annual subscription limit

The adult ISA annual subscription limit for 2022/2023 will be maintained at £20,000.

Junior ISA and Child Trust Fund annual subscription limit

The annual subscription limit for Junior ISAs and Child Trust Funds for 2022/2023 will be maintained at £9,000.

National Savings & Investment (NS&I) Green Savings Bond

The NS&I introduced Green Savings Bonds on 22 October 2021.  These will be on sale for a minimum of 3 months.

These are a 3-year fixed-term savings product with an interest rate of 0.65% and UK savers can invest between £100 and £100,000.  This is to enable UK savers to take part in the collective effort to tackle climate change.

National Living Wage and National Minimum Wage

The National Living Wage for individuals aged 23 and over will increase by 6.6% from £8.91 to £9.50 an hour effective from 1 April 2022.

National Minimum Wage rates will also rise  from April 2022:

• the rate for 21 to 22 year olds will increase by 9.8% from £8.36 to £9.18 per hour
• the rate for 18 to 20 year olds will increase by 4.1% from £6.56 to £6.83 per hour
• the rate for 16 to 17 year olds will increase by 4.1% from £4.62 to £4.81 per hour
• the rate for apprentices will increase by 11.9% from £4.30 to £4.81 per hour
• the accommodation offset rate will increase by 4.1% from £8.36 to £8.70 per hour

Universal Credit taper and work allowance

• The taper rate that applies to Universal Credit will reduce from 63% to 55% by 1 December 2021  so working households should be able to keep more of every pound they earn
• The amount that households with children or a household member with limited capability for work can earn before their Universal Credit award begins to be reduced (the Work Allowances) will increase by £500 a year by 1 December 2021

Alcohol duties

To help with the cost of living, the duty rates on beer, cider, wine and spirits will be frozen for another year.

Tobacco duties

From 6pm on 27 October 2021:-

Duty rates on all tobacco products increased by RPI + 2%.

The rate on hand-rolling tobacco increased by RPI + 6% and the minimum excise tax increased by RPI +3% this year.

https://jsca.co.uk/autumn-2021-uk-budget-businesses/

https://jsca.co.uk/autumn-2021-uk-budget-english-business-rates/