Autumn Budget 2022 Summary

Chancellor Rishi Sunak has unveiled the contents of his Budget, in which he set out the government’s tax and spending plans for the next 12 months.

Below, we look at a summary of the main points that may affect you or your business.

Dividend Tax

Income tax payable on dividends has been increased by 1.25%. The dividend basic rate will be set at 8.75%, the higher rate will be 33.75% and the additional rate will be 39.35%. The changes will apply from 6th April 2022 and will represent the first rise in dividend tax since April 2018. The dividend allowance will remain at £2,000 meaning that individuals earning dividends of less than £2,000 per annum will continue to pay no dividend tax.

Annual Investment Allowance extended

The expenditure cap on the Annual Investment Allowance (AIA) of £1million has been extended from December 2021 to March 2023. The AIA is a 100% capital allowance which can be claimed on qualifying expenditure on plant and machinery, up to the annual limit. The current limit of £1 million was due to expire at the end of December 2021, but this extension will encourage businesses to bring forward investment and take advantage of the higher allowance.

R&D Tax Relief

The Chancellor announced that from April 2023 research and development (R&D) tax relief will be refocused onto UK based businesses. Whilst the UK has the second higher R&D relief spending in the World, out of the £48 billion claimed in R&D tax relief last year, nearly half of this was for R&D conducted outside of the UK.

Business Rates

Businesses within retail, hospitality and leisure will only pay 50% business rates during 2022/23, up to a maximum of £110,000. Also, next year’s increase in multiplier has been cancelled and revaluations will take place every three years from 2023. A new Business rates Relief will encourage businesses to make property improvements that support net zero targets, for example the installation of solar panels. It guarantees that businesses will not pay more business rates for 12 months after they have made qualifying improvements to their premises.

Capital Gains on Residential Property

The current 30 day capital gains tax payment window has been extended to 60 days, with immediate effect. Therefore, any properties sold after 27 October 2022, the new 60 day rule will apply.

National Insurance Contributions

It has been confirmed that National Insurance rates will increase by 1.25% from April 2022. This means that employee rates for pay earned over £9,568 will rise from 12% to 13.25%. Similarly, the employer rates will rise from 13.8% to 15.05%.

National Minimum/Living Wage

The following increases have been announced (for April 2022):

• Over-23s to rise from £8.91 to £9.50 per hour
• 21-23s to rise from £8.36 to £9.18 an hour
• 18-20s to rise from £6.56 to £6.83 an hour
• 16-17s to rise from £4.62 to £4.81 an hour
• Apprentice rate to rise from £4.30 to £4.81 an hour

Universal Credit

Universal Credit taper rate 63p to 55p and work allowance raised by £500 a year

Please contact our office if you would like to discuss any of the above in more detail.