On October 27th, Rishi Sunak revealed his 2021 Autumn Budget. While there were changes to Universal Credit payments in an attempt to appease families, many families are still concerned about the continued rise in the cost of living, as well as increasing National Insurance contributions.
But what about investors? Here are three ways in which the 2021 Autumn Budget could affect your investments.
ISA allowances frozen
For the fifth year in a row, the annual payment limit for adult ISAs will remain at £20,000. The allowance for Junior ISAs will also be frozen, remaining the same as it was after being doubled in 2020.
Freezing these limits for another year is not expected to have an immediate impact on investors, but there are concerns about the future. With allowances not being increased in line with inflation, experts are worried about how this “stealth tax” will affect ISA holders down the line.
If the allowance continues to be frozen in the coming years, Laura Suter, Head of Personal Finance at AJ Bell, says, “The move means that those with more than the current £20,000 limit to save each year could end up with assets outside an ISA, which they then have to pay capital gains tax or income tax on.”
CGT deadline extended
A little relief for those selling residential property, as Sunak has doubled the deadline for Capital Gains Tax payments following a property sale to 60 days. This new extension applies to both UK and non-UK residents, and has been introduced after numerous property owners were hit with unexpected fines.
The impact on shares
For holders of UK shares, there are three sectors that are affected more than others by this autumn’s Budget.
Pubs are not only benefitting from the freeze in business rates, but also from an extra 50% relief for 12 months. What’s more, the alcohol duty system has been simplified, as well as being frozen for a year. Smaller local drinks producers have been given additional support, and some draught beers and ciders have seen their duty rates cut by 5% – which could have a positive impact on the bottom line, particular for wet-led pubs.
In the airline sector – one hit particularly badly by COVID-19 – commercial domestic flights within the UK will see air passenger duty cut by 50%. However, a new “ultra-long-haul” band for flights of over 5,500 miles will see taxes increase for passengers flying further.
In housebuilding, Sunak confirmed that Residential Developer Property Tax would be charged on all profits over £25m, at a rate of 4%. It appears that the market was expecting worse, with share prices for some major homebuilders increasing when the announcement was made.
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