With the COP26 Climate Conference coming to a close and a raft of new taxation changes announced in the Chancellor’s two budgets this year, there have been a lot of business adjustments to make and modifications to think about. It’s time to take stock of what we’ve got to grips with in 2021 and what is coming over the horizon for businesses in 2022.
April pledges
For each Budget, our Technical Director Alan Sowden assesses and summarises the main changes announced. At the start of 2021, we were in the depths of pandemic chaos and the focus of the Spring Budget in March was on jobs retention and creation (a further £65bn of measures were announced), with the furlough scheme (CJRS) extended to September and additional Self Employed Income Support Scheme (SEISS) Grant, Recovery Loan and Restart Grant details announced.
The IR35 rules applying to public sector engagers were finally rolled out to the private sector from April 2021, whereby the end user of a contractor is responsible for ascertaining the correct treatment of the engagement from a tax perspective.
The tax raising headline of the Spring Budget was the increase in Corporation Tax from April 2023 with a return to the old system of a small companies’ rate (those with profits of up to £50k being taxed at 19%, and a sliding scale for profits up to £250k being taxed at the full 25% rate). A slight ‘sweetener’ to the tax increase came in the form of changes to Income and Corporation Tax Loss Relief, VAT Deferral and a ‘Super Deduction’ for capital investment.
Planned rises to the Income Tax personal allowance (to £12,570) and the higher rate threshold (£50,270) went ahead from April as planned, but these allowances are now frozen until April 2026. The Capital Gains Tax annual exempt amount remained unchanged at £12,300 and all inheritance tax allowances and the pensions lifetime allowance will stay at current levels until April 2026.
October announcements
The big news of the Chancellor’s October Budget was the increase to the National Minimum Wage and National Living Wage rates from April 2022, which Alan summarised for us. Accompanying this news was an increase in National Insurance in April 2022 to cover the Health and Social Care Levy. This Levy, expected to be a separate charge from April 2023, will be given temporary effect in the interim by increasing by 1.25% the rates of Class 1 NIC (both employee and employer), Class 1A NIC on most Benefits in Kind, and Class 4 NIC paid by the self-employed and partnerships.
A welcome extension of Capital Gains Tax return and payment period for disposal of residential property was announced. For properties where completion is on or after 27 October 2021, this period is extended to 60 days (see our separate article about this).
A greener 2022
As our CRM resident ‘all things green’ expert, Loren Forbes noticed, an interesting consequence of our changing working practices through the pandemic was the reduction in carbon emissions that companies either unwittingly or deliberately made. With many employees working from home, emissions were saved along with commuting time and fuel costs.
Whether you believe the COP 26 Climate Conference was a success or not, zero carbon practices are going to become a key target area for many businesses in the year to come with likely new legislation coming into force that will affect all businesses as the UK tries to reach its net zero targets. More eco-friendly supply chains will be demanded as companies look for suppliers who are net zero. And future employees will be looking for employers who are committed to improving the environment and offering flexible working and transport options.
It’s always a good idea to try to stay ahead of the curve and in Loren’s previous article ‘Small green steps to make a big difference’, she outlines some simple changes that businesses can make to move towards net carbon zero. In addition, steps to use renewable energy, reducing paper and packaging use and sustainable cleaning products are all great ways to start to make a difference.
If any of these taxation changes passed you by or you need advice on how to take a greener path in your business, speak to Alan, Loren or any of the experts at CRM on 01865 379272.
