Key Updates: Autumn Budget Statement 2021

• The proposed increase in Corporation Tax from April 2023 is still on plan, increasing the Corporation Tax rate to 25% for companies with profits above £250,000 (and to a lesser extent for companies with profits between £50,000 and £250,000);
• The personal allowances, CGT annual allowance and Inheritance Tax (IHT) nil rate band are set to continue at their current levels until April 2026;
• The 1.25% Health and Social Care Levy on earnings and dividends will be introduced from April 2022, as previously announced;
• The 4% Residential Property Developer Tax, which was announced earlier this year will be introduced from 1 April 2022, on profitable businesses with profits exceeding £25 million; and
• The new tax regime for asset holding companies (which was announced earlier this year) will be applicable from April 2022. The regime is intended only to be available in respect of certain types of investment arrangements and it will not have any impact on the taxation of profits from trading activities, UK real estate or intangibles.
• The government intends to consult on proposals to allow a company to change its place of incorporation to the UK, a.k.a. redomiciling. Allowing redomiciling would enable a substantially less administratively  complex route of relocating to and incorporating in the UK compared to other methods.
• Unsurprisingly perhaps in the wake of Brexit, group relief between EU and U.K.  companies has been restricted by the budget. The ability  to use corporate losses sustained by EU companies to relieve the profits of U.K.  companies in the same group  (often referred to as “Marks & Spencer’s losses” as a result of a case involving that company) was always quite limited in any event, but this avenue is now closed.

The following changes that have been announced which will impact businesses:

• ‘Basis period reform’ for the taxation of business income will be introduced in full from 6 April 2024, with transitional rules for the tax year 2023/24 (a deferral by a year from what was originally proposed).
• Reforms to business rates, including investment reliefs and the cancellation of the expected multiplier and a 50% discount for the retail, hospitality and leisure sectors.
• Annual Investment Allowance, which was due to drop to £200,000 from 1 January 2022, will now remain at its current level of £1 million until 31 March 2023.
• The deadline for reporting and paying CGT arising on disposal of UK residential property (and, for non-residents, direct or indirect disposal of UK real property of any kind) is to be extended from the current 30 days from completion to a more manageable 60 days, effective from 27 October 2021.
• Research and Development tax relief will be reformed, from April 2023, both by expanding qualifying expenditure to include data and cloud costs and by refocusing support towards innovation in the UK.

Please get in touch with Hed Amitai below in the first instance in case you have any queries.

(This briefing was put together by Hed Amitai, our head of tax and wealth structuring and Philip Alfandary, tax partner at our sister firm Rosenblatt.)

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