In the Budget 2021

Business Rates

  1. freezing the business rates multiplier from 1 April 2022 until 31 March 2023.                                 
  2. introducing a new temporary business rates relief for eligible retail, hospitality and leisure properties for 2022-23. Eligible properties will receive 50% relief, up to a £110,000 per business cap.
  3. introducing a 100% improvement relief for business rates. This will provide 12 months relief from higher bills for occupiers, where eligible improvements to an existing property increase the rateable value. The government will consult on how to implement this relief, which will take effect in 2023 and be reviewed in 2028.
  4. introducing from 1 April 2023 until 31 March 2035 targeted business rate exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible heat networks, to support the decarbonisation of non-domestic buildings.
  5. increasing the frequency of business rates revaluations to every 3 years instead of every 5 years, starting in 2023.
  6. extending transitional relief for small and medium-sized businesses, and the supporting small business scheme, for 1 year.

Corporation tax 

As previously announced the rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19%, and there will be taper relief for businesses with profits between £50,000 and £250,000, so that their average rate is less than the main rate. In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023.

Capital Allowances Annual Investment Allowance (AIA) 

The £1m AIA will be extended to 31 March 2023.

R&D tax relief schemes 

Following the recent consultation, R&D tax reliefs will be amended to expand qualifying expenditure to include data and cloud costs, make sure that the R&D regimes are focused on encouraging investment in UK based R&D, and to target abuse and improve compliance. These changes will be legislated for in Finance Bill 2022-23 and take effect from April 2023.

English Freeport tax site designation

Some of the English Freeport tax sites have been designated. Businesses within these tax sites can benefit from the various tax incentives for these areas. The first tax sites will be in Humber, Teesside and Thames, and those Freeports will be able to begin initial operations from November.

Living wage 

The NLW, for individuals aged 23 and over will rise by 6.6% to £9.50 an hour from 1 April 2022. Other age ranges of NLW will also increase from this date.

The Health and Social Care Levy

As announced previously, legislation is introduced for a new 1.25% Health and Social Care Levy. It will apply UK-wide, to the same population and income as Class 1 (Employee, Employer) and Class 4 (Self-Employed) National Insurance contributions (NICs), and to the main and additional rates. The Levy will be effectively introduced from April 2022. From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to the earnings of individuals working above State Pension age.

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