Autumn Budget: No change to employee incentives and capital gains tax

There was considerable speculation before the Autumn 2021 Budget and Spending Review that the Chancellor might increase Capital Gains Tax (CGT) rates generally or limit or restrict the tax benefits of the popular and advantageous Employee Ownership Trust (EOT) structure.

• The main CGT remains at 20% (or 28% for gains from residential property).
• For Business Asset Disposal Relief (previously known as Entrepreneur’s Relief) the advantageous 10% rate still applies.
• No change to the tax benefits of Enterprise Management Incentive (EMI) schemes.
• The qualifying criteria for establishing an employee ownership Trust (EOT) has not changed and the 0% CGT rate for sellers to an EOT still applies.
• The Chancellor did however confirm as previously announced, that rates of income tax applicable to dividend will increase from 6th April 2022 as follows:
  • The dividend ordinary rate will be set at 8.75, the dividend upper rate will be set at 33.75% and the dividend additional rate will be set at 39.35%.
  • The dividend trust rate will also increase to 39.35% to remain in line with the dividend additional rate.

Help to grow for SMEs 

The Chancellor also announced several measures to boost SME businesses:

• The Government is to provide over £1.6 billion for the British Business Bank’s Regional Funds to provide debt and equity finance to SMEs.
• It will expand the Regional Angels programme providing funding for Start Up Loans to deliver 33,000 loans to entrepreneurs across the UK looking to start or grow their business.
• The Help to Grow scheme will provide further productivity support to over 100,000 SMEs around the UK through management training and support for digital adoption.
• In addition, a £1.4 billion Global Britain Investment Fund will support some of the UK’s leading manufacturing sectors and stimulate regional growth across the UK.

To read the Autumn Budget and Spending Review documents in full visit gov.uk