Autumn Budget 2021: Private client

It appears that the main announcement affecting individuals came out ahead of the Budget, with the introduction of the health and social care levy. Along with an increase to the rates of dividend tax announced last month, the levy is expected to raise by far the biggest amount of revenue of all the budgetary measures.

Given the rhetoric of supporting working families, it was surprising that there wasn’t more announced to share the tax burden among different generations. Individuals with generous pension savings, rental incomes or anyone who feared a capital gains tax hike can rest easy.

As far as personal taxes go, the speech largely consisted of confirming announcements that had already been made. 

It has been said that the art of taxation is plucking the goose to obtain the largest amount of feathers with the least possible amount of hissing. Well, it appears the Chancellor read the mood music of the country and determined that the tax goose is plucked and already in the oven. 

Here’s what individuals need to to be aware of:

  • The health and social care levy, which will apply from 6 April 2022, was confirmed along with a dividend tax increase of 1.25 per cent. The levy will be aligned to National Insurance contributions (NICs) thresholds in future, which are at least set to be uplifted by 3.1 per cent for 2022/23;
  • The introduction of making tax digital for income tax self-assessment (MTD for ITSA) is delayed until 6 April 2024, with general partnerships not being required to join MTD for ITSA until 6 April 2025. Ahead of this, income tax basis period reforms will go ahead, affecting the self-employed and partnerships from 2023/24 with taxable profits aligned to the tax year;
  • Bringing welcome relief is the extension of the capital gains tax filing deadline from 30 days to 60 days for relevant property sales that complete on or after 27 October 2021; and
  • Business owners and furnished holiday let landlords can continue to benefit from the £1m annual investment allowance until 31 March 2023.

What was most notable about this Budget is what wasn’t said. There were no announcements on capital gains tax increases, the possibility of a wealth tax or limiting pension tax relief, as might have been expected. Which begs the question: how long will individuals have to keep looking over their shoulder? 

The Chancellor made it clear that everyday spending would have to be met by tax increases. He wants to move towards a low tax economy, but there is still a significant pandemic bill to pay for and spending commitments to fund. As a result, don’t be surprised if the Chancellor brings in further tax rises for individuals in the future. 

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