Autumn 2021 Budget: Highlights

The Chancellor, Rishi Sunak, delivered the Autumn 2021 Budget on 27 October 2021. Many anticipated for there to be a major overhaul of taxes, including Capital Gains Tax and Inheritance Tax in order to recover Government spending during the Covid-19 crisis, i.e., the cost of the Furlough Scheme. However, in fact, the Chancellor introduced very little changes to the tax system.

The most important announcements for the private client world are listed below.

Lifetime Planning

•  The deadline for reporting and paying any capital gains tax (CGT) on a sale of residential property in the United Kingdom has been extended from 30 days to 60 days after the completion date. The time limit applies to both UK residents and non-UK residents disposing of property in the United Kingdom.
• The income tax rates applicable to dividend income will rise by 1.25%. The dividend ordinary rate and the dividend upper rate will rise to 8.75% and 33.75% respectively. The dividend additional rate and the dividend trust rate will rise to 39.35%.
• From 1 April 2022, the annual chargeable amounts for the annual tax on enveloped dwellings (ATED) will increase by 3.1%.

Real Estate

•  The Government will introduce a new Residential Property Developer Tax (RPDT) on residential property development profits of a residential property developer derived from UK residential property development. This will take effect from 1 April 2022 for relevant profits arising on or after this date.
• A new tax regime for Qualifying Asset Holding Companies (QAHCs) will come into effect from 1 April 2022. A QAHC is exempt from UK tax on gains on disposals of specific shares and overseas property as well as profits of an overseas property business that are subject to tax in an overseas jurisdiction. A number of other measures designed to simplify the taxation of financing arrangements for QAHCs will also be introduced to ease the tax and administrative burden.

Charities

• The Government has no intention of removing any of the existing business rates reliefs, including the mandatory and discretionary charity reliefs.
• The Government will introduce a new temporary business rates relief for eligible retail, hospitality and leisure properties for 2022-2023. Charities with eligible properties (such as charity shops) will benefit from a 50% relief. There will be a cap of £110,000 per business.

Companies

•  The Government has published a Consultation containing proposals for enabling the re-domiciliation of a company’s corporate seat to the UK. It seeks views on the introduction of a UK re-domiciliation regime.

If you have any questions, please do not hesitate to contact James Cohen directly on [email protected] or 0207 822 2257.

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