UK: Tax measures proposed in Autumn Budget

Business rates, R&D tax relief, annual investment allowance, banking surcharge, residential property developer tax

Business rates, R&D tax relief, annual investment allowance, banking surcharge

The Chancellor’s Autumn Budget speech, 27 October 2021, did not propose any fundamental reform of the tax system. Instead, the Chancellor focused on “tweaks” to select areas of the tax system.

There were surprisingly few environmental measures ahead of COP26 and no attention was given to addressing how the UK taxes wealth. Generous changes to business rates were announced, but these stopped short of the major reform that some had requested. Overall, there was a focus on the creative, retail, hospitality and leisure industries with not much more for the rest of the business community, leaving time to continue to consider the previously announced increases to corporate tax and National Insurance Contributions.

The measures proposed include the following:

  • Business rates: The current system is to be retained but with some key reforms (from 1 April 2023) including increasing the frequency of revaluations to three years and introducing new reliefs for investment in property improvements and green technology. In addition, temporary business rates reliefs were also announced for 2022-2023—a freeze in the business rates multiplier and a 50% discount for the retail, hospitality and leisure sectors (capped at £110,000 per business). Read more
  • R&D tax relief: The reform is to be implemented from April 2023 to improve the effectiveness by expanding qualifying expenditure to include data and cloud-computing costs and to refocus support on innovation in the UK. Read more
  • Annual investment allowance: The temporary £1 million allowance is to be extended to 31 March 2023.
  • Banking surcharge: The surcharge rate is to be reduced from 8% to 3%, effective from 1 April 2023 and the annual allowance for groups will also be increased to £100 million (from £25 million) to remove more “smaller” UK banks from the scope of the surcharge. Read more
  • Residential property developer tax: A new 4% tax (on relevant group profits over £25 million) that certain companies derive from UK residential property development was confirmed to apply from April 2022. Read more

Read a one-page description [PDF 169 KB] about the tax measures in the Autumn Budget as prepared by the KPMG member firm in the UK

Read more about the budget on KPMG’s dedicated budget webpage

 

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