Some of the key Budget announcements, provided by Croner Taxwise, are detailed below.
Annual Investment Allowance
The annual investment allowance (AIA), which is currently set at £1m per annum, was due to fall to £200,000 from 1 January 2022. The Chancellor has announced that the temporary increase will be extended, with the AIA remaining at £1m up to 31 March 2023.
Research and Development Tax Credits
The Chancellor announced in his speech that the R&D tax credit regime would be reformed. The scope of the regime will be extended to include expenditure on data and cloud computing costs. However, the regime will be refocused towards innovation carried on in the UK – relief for expenditure on activity taking place overseas is to be restricted. Little detail on this was given on Budget Day, and it appears plans for these changes, and plans to restrict abuse of the system and improve compliance will be announced later in the autumn.
Time Limit for Payment on Property Disposals
Where an individual, trustees or personal representatives dispose of UK land and completion of the disposal takes place on or after 27 October 2021, the time limit for delivery of a CGT return and payment of tax is increased to 60 days (previously 30 days) following completion of the disposal. (The reporting requirement applies to UK residents who dispose of UK residential property and to non-residents who make direct or indirect disposals of UK land).
Income Tax Charges and Rates
Legislation to be included in Finance Bill 2021– 22 will set the following income tax rates for 2022–23:
- the main rates applicable to non-savings, non-dividend income of taxpayers in England, Wales and Northern Ireland;
- the savings rates that will apply to savings income of all UK taxpayers; and
- the default rates, mainly applicable to trustees and non-residents.
The policy paper published on 27 October 2021 confirms that these will all remain at the same levels as 2021–22. The income tax bands to which the basic, higher and additional rates apply were set in advance by FA 2021.
The 0% band for the starting rate for savings income will remain at £5,000 for 2022-23 applicable to the whole of the UK.
ISAs and Child Tax Funds
The 2022–23 annual subscription limit for adult and junior ISAs and child tax funds will remain unchanged, at £20,000, £9,000 and £9,000 respectively.
Rates of Income Tax Applicable to Dividend Income
The rates of income tax applicable to dividend income will be increased by 1.25% from 6 April 2022. This means that the ordinary, upper and additional rate will become 8.75%, 33.75% and 39.35% respectively. The dividend allowance will remain at £2,000. The dividend trust rate will also increase by 1.25% to 39.35% to remain in line with the additional rate. The rate of tax applicable to loans to participators and on the dividend income of the estates of deceased persons will also increase by 1.25%.
Company Car Fuel Benefit
The taxable benefit of free fuel provided for use in a company car is calculated using the same percentage as is used for calculating the company car charge (dependent upon the CO2 emissions of the vehicle). The percentage is applied to a fixed taxable benefit multiplier. From 6 April 2022, the multiplier is increased by £700, from £24,600 to £25,300.
Company Car Benefit
Car tax rates will increase by 1% in 2022-23 and will then remain frozen for a further 2 years, until 2024-25.
Company Vans and Van Fuel Benefit
The taxable benefit of a company van made available for private use is a fixed scale charge. From 6 April 2022, the scale charge is increased by £100 from £3,500 to £3,600. Similarly, the taxable benefit of private fuel provided for use in a company van is a fixed scale charge. From 6 April 2022, this scale charge is increased by £19 from £669 to £688.
