Autumn 2021 Budget Update

On 27 October, Chancellor Rishi Sunak disclosed the contents and details of the Autumn 2021 Budget.

Important points of the budget was announced over the previous week and here are the important things affecting mainly contractors, small businesses, and landlords.

For small limited company owners, here are 2 important points.

Announced in Spring Budget 2021, the Corporation Tax Increase will grow from 19%, which is the current rate, to 25% from April 2023. Rishi has supported this by presenting a Small Profits Rate, which will keep the Corporation Tax Rate at 19% for businesses who have profits of over £50,000.

For those who have profits between £50,000 - £250,000, the rate will slowly increase between 19% and 25%.

The next important point is the Dividend Tax Rate increase that was previously announced back in September 2021.

Beginning April 2022, dividend rates will increase with the following:

Basic Rate - currently 7.5%, will increase to 8.75%

Higher Rate - currently 32.5%, will increase to 33.75%

Additional Rate - currently 38.1%, will increase to 39.35%

This means that personal tax liabilities for directors/shareholders of limited companies will increase.

For employers, adding to what was mentioned above, employers are faced with 2 impacts:

The National Insurance Contributions will grow by 1.25% beginning on April 2022, but will lower back down in April 2023 and will eventually be replaced by the new Health and Social Care Levy.

Another impact of the Autumn 2021 Budget for employers is the National Living Wage which means than from April 2022, it will increase from £8.91 to £9.50 an hour. This, together with the increase in National Insurance Contributions, could significantly increase wage costs.

If you have any questions with this, get in touch with us. Call us at 01892 807001.