Autumn Budget 2021
Below is a summary of items announced that may be relevant to FSL clients. For more detail, please refer to the GOV.UK website and the Overview of Tax Legislation and Rates (OOTLAR) published by HM Treasury and HMRC it provides a thorough summary of all the tax-related changes. All the changes announced will form part of the upcoming Finance Bill 2021-22.
Personal Tax: Dividend Tax increase: As announced on the 7th of September 2021, the proposed measure will see increases to the rates of income tax applicable to dividend income by 1.25 percentage points. Therefore, the dividend income within the basic rate band will be set at 8.75%, the dividend income within the higher rate band will be set at 33.75% and the dividend income within the additional rate band will increase to 39.35%. The proposed changes will take effect from 6 April 2022. (Ref: OOTLAR, para 1.03)
Banking Corporation Tax – Surcharge: The government intends to cut the current surcharge on profits from 8% to 3%. In addition to this, the Chancellor announced that the surcharge allowance will also increase from £25m to £100m. The measures will take place for the financial year beginning on 1st April 2023. (Ref: OOTLAR, para 1.08)
Real Estate Investment Trust (REITs) – Amendments: As revealed on the 20th of July 2021, the government has proposed making changes to the rules applying to REITs. Under new proposals, the “holders of excessive rights” charge where property income distributions (PIDs) are paid to investors will be removed. Additionally, a new simplified balance of business test will be introduced, and additional statements will no longer be required, if a group account shows property rental and business profits/assets compromise at least 80% of the group total. (Ref: OOTLAR, para 1.21)
Personal Tax – ISA Subscription: Announced during the budget, the adult ISA annual subscription limit for 2022 to 2023 will remain unchanged at £20,000. (Ref: OOTLAR, para 2.01)
The FSL Business Analysis team is actively analysing any potential changes today’s announcements will have on our products moving forward.