The UK has published the Finance Act 2021 in the Official Gazette. The Act received royal assent (was enacted) on 10 June 2021. Some of the main tax-related measures include the following:

• For 2021/22, the personal allowance is GBP 12,570 and the basic rate limit is GBP 37,700, and the higher rate threshold is GBP 50,270 (personal allowance plus basic rate limit), with these amounts maintained for 2022/23 to 2025/26;
• The standard (main) corporation tax rate is maintained at 19% for the financial year beginning 1 April 2022 and is increased to 25% from the financial year beginning 1 April 2023;
• A 19% small profits rate is provided from 1 April 2023 for companies with profits up to GBP 50,000 that are not ring fence profits, with marginal relief provided for profits above GBP 50,000 up to GBP 250,000;
• The diverted profits tax is increased from 25% to 31% from the financial year beginning 1 April 2023, which maintains the 6% increase over the standard corporation tax rate;
• A temporary extension of periods to which trade losses may be carried back is provided, which includes losses made in 2020-21 and 2021-22 may be carried back up to three years, instead of the standard one year, with losses required to be set off against profits of the most recent year first, and total losses carried back to the second and third prior years subject to a maximum cap of GBP 2 million that applies for each of the two periods 2020-21 and 2021-22 (losses carried back one year are not capped);
• A super deduction and other temporary first-year allowances are introduced for companies investing in qualifying new (unused) plant and machinery between 1 April 2021 and 31 March 2023, including:
  • a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances;
  • a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances; and
  • a first-year allowance of 100% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances when for use partly for the purposes of a ring fence trade and partly for the purposes of another qualifying activity;
• Enhanced allowances and stamp duty relief is provided for designated tax sites within freeports, including:
  • an enhanced rate of structures and buildings allowance (SBA) of 10%, with the condition that the structure or building in the designated tax site is brought into use on or before 30 September 2026;
  • a 100% enhanced capital allowance for companies investing in plant and machinery in designated tax sites until 30 September 2026; and
  • relief from stamp duty land tax in the case of transactions relating to land in designated tax sites with an effective date falling on or before 30 September 2026;
• The temporary GBP 1 million limit for the Annual Investment Allowance (AIA) is extended by one year with effect from 1 January 2021 to 31 December 2021 (three years total beginning 1 January 2019);
• For accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D tax credit that a company can receive in any one year is capped at GBP 20,000 plus three times the company's total PAYE and National Insurance contributions liability;
• Provisions that gave effect to the EU Interest and Royalties Directive are repealed, including that domestic withholding taxes apply to payments of annual interest and royalties made to EU companies as follows, subject to the terms of an applicable tax treaty:
  • payments made on or after 1 June 2021; and
  • payments made in disqualifying circumstances on or after 3 March 2021 but before 1 June 2021, which are circumstances where a payment is made in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure the exemptions;
• The temporary reduced VAT rate of 5% for hospitality, holiday accommodation, and attractions is extended until 30 September 2021, which is followed by the introduction of a new reduced rate of 12.5% from 1 October 2021 that will be in effect until 31 March 2022, after which it will revert to the standard rate;
• Measures for the VAT deferral payment scheme for COVID-19 are legislated for, including for the payment in installments and for penalties when deferred VAT is not paid or there is no agreement to pay;
• Changes are made to enable the extension of the scope of Making Tax Digital for VAT to all VAT registered businesses with effect from 1 April 2022;
• Provisions are introduced in relation to the Protocol on Ireland/ Northern Ireland in the EU withdrawal agreement concerning VAT and distance selling, including provisions for the One Stop Shop and the Import One Stop Shop accounting schemes and other e-commerce VAT changes;
• New provisions are introduced to enable Treasury to make regulations to implement OECD model rules that will require digital platforms to send information about the income of their sellers to both HMRC and to the seller themselves;
• The new Plastic Packaging Tax is introduced from 1 April 2022, which is levied at a rate of GBP 200 per tonne of plastic packaging that contains less than 30% recycled plastic content;
• Provisions of the Carbon Emissions Tax legislation, which were not commenced, are repealed according to the government's announcement that Emissions Trading System rather than the Carbon Emissions Tax will be the UK's carbon pricing policy from 1 January 2021;
• New penalty regimes are introduced for late submission and late payment that apply for VAT taxpayers for periods starting on or after 1 April 2022 and for taxpayers in Income Tax Self Assessment (ITSA) from 6 April 2023 or 6 April 2024 (applies from 2023 if the taxpayer's business or property income exceeds GBP 10,000):
  • Late submission - Instead of automatically receiving a financial penalty for failing to meet submission deadlines, the new points-based late submission regime provides that taxpayers will receive a point every time they miss a submission deadline and once a taxpayer has reached the relevant threshold, a financial penalty of GBP 200 will be charged for that failure and every subsequent failure to make a submission on time - Thresholds:
    • annual submission - penalty threshold of 2 points
    • quarterly submission - penalty threshold of 4 points
    • monthly submission - penalty threshold of 5 points
  • Late payment - The new late payment regime is proportionate to the amount of tax owed and how late the payment is, including:
    • no penalty if the outstanding tax is paid within 15 days after the due date;
    • a 2% penalty on the outstanding tax if paid between 16 and 30 days after the due date;
    • a 4% penalty on the outstanding tax if still unpaid after 30 days; and
    • a further 4% annualized penalty that accrues on a daily basis on outstanding tax due after 30 days and stops accruing when the tax due is paid;
• Changes are made to the legislation containing the rules for Hybrids and other mismatches to ensure that the legislation operates proportionately and as intended; and
• Technical amendments are made to the corporate interest restriction:
  • the first amendment clarifies the way special provisions apply for Real Estate Investment Trusts, which applies retroactively from 21 July 2020; and
  • the second amendment ensures that no penalties arise for the late filing of an Interest Restriction Return where there is a 'reasonable excuse', which applies retroactively from 1 April 2017.

In addition to the above, the Finance Act 2021 also includes various other amendments, including amendments to legislate for different support programs for COVID-19.