Budget October 2021


Today’s post takes a look at the usual speculation in advance of the Budget October 2021, and at what actually happened.

Budget October 2021

This is the fourth budget of this Tory government, which is now close to two years old.

Thanks, both to the virus and the need to have a shot at beating Labour in 2024, this Government has generally been acting in a non-Conservative fashion.

  • We’ve had tons of spending and debt, and recently a tax rise (in NICs and on dividends, ostensibly for the NHS and then for social care spending – the so-called Health and Social Care Levy).

The theme is expected to be a roadmap for rebuilding the country’s post-Covid finances, but since we have a looming climate conference in Scotland (COP26), we might also expect some green stuff (beyond the grants for largely unsuitable air source heat pumps that were announced last week).

  • The budget also comes against a backdrop of high inflation and market expectations of rising interest rates in the coming months and years.

So nothing is completely off the table.


Remember that a lot of speculation relevant to an investment blog is produced by investment firms and accountants in order to provoke action (over-reaction?) from clients and investors in advance of draconian measures that rarely appear

  • Notes in blue indicate what actually happened.
Income tax and NIC

The recent care levy announcement probably means that there won’t be any further direct tax rises.

  • There weren’t.
Capital gains

There has been talk both of aligning CGT rates with income tax and of reducing the annual exemption (£12.3K), though neither of these would be likely to raise too much money.

  • But announcing a CGT rise a year in advance, say, might incentive asset owners to sell up now, bringing forward tax revenues.

Nothing happened.

Inheritance tax

No changes to the main rate (40%) or the exemption (£325K, plus £175K of property) were expected.

  • Removal of the BPR exemption for AIM stocks was discussed again.

And so was the possibility of removing the CCT uplift on death.

  • Currently, people inherit at market value rather than the original price paid by the person who has died.

Removing this exception would effectively apply CGT on death.

  • Nothing happened.
Wealth tax

There hasn’t been a serious discussion of wealth taxes this time, though a Labour back-bencher did publish a paper on this topic last week.

  • Nothing happened.
Job support

The job support scheme has now closed, and nobody expects it to re-open.

  • It didn’t.
Corporate tax

We’ve already had the cancellation of planned cuts to corporation tax, and the planned increase to 25% for the large-company rate in 2023.

  • Nothing further was expected.

The expectation was correct (the bank surcharge was adjusted slightly).


The proposal to restrict income tax relief on pension contributions to the basic rate (or as a compromise to introduce a 25% or 30% relief for all) comes up before every budget but is never acted on.

  • There had also been speculation that the fee cap on DC pensions would be raised to support investment into (green) infrastructure and private equity.
See also:  UK budget breakdown - income and spending

And some observers thought that early access to state pension benefits (presumably at a reduced level) might be introduced to help workers with lower life expectancies.

  • The LTA has already been frozen for five years and changes to the 25% tax-free lump sum seemed unlikely (at least on a retrospective basis).

Nothing major was expected on ISAs, VCTs or EIS, though the latter two might be incentivised to invest more in UK startups, now that we are out of the EU.

  • Nothing happened.
Green stuff

Some detail on the path to the UK’s commitment to Net Zero was expected.

  • There could be tax breaks for businesses investing in green energy plant and/or green vehicle fleets.

We might even get a carbon tax.

For individuals, the most likely announcement was incentives for insulation and/or moving over to electric vehicles.

  • This might take the form of grants (as per heat pumps) or just VAT reductions.

With this kind of thing, the devil is in the detail and the numbers rarely stack up long-term.

  • There was a bit of green talk, but few concrete proposals. Perhaps the government is waiting to see what they achieve at the COP26 summit.

The property market (outside London) is booming, with a drive for outside space accelerated by the Stamp Duty holiday.

  • No further consumer legislation was expected.

Some observers foresaw a tax on the larger housebuilding groups in order to pay for the cost of replacing flammable cladding on high-rise buildings.

  • This could be dressed up as a “land-hoarding levy”.

The housebuilding tax turned up.

Sin taxes

There was a lot of tabloid speculation about “30p on the price of a pint”, but post-Covid pub prices are already dramatically higher here in London, so I was not convinced.

  • Alcohol duty was actually reduced for most things (particularly draught beer) but stringer red wines might be more expensive. I remain to be convinced that pubs will pass on these cuts.

A planned fuel duty rise was cancelled.

Social Care

Nothing further was expected after the recent announcement on the Care Levy.

  • Nothing happened.
Other stuff

There could be some announcements in the area of business rates.

  • Covid-hit firms (hospitality and physical retail) want some concessions, which could be funded by some kind of online sales tax (even though the G20 agreements on global minimum tax rates appeared to rule these out).

There was a nod to hospitality and retail in the form of a one-year 50% cut in business rates.


I can’t think of any from a private investor’s perspective.


It was another damp squib of a budget, with little that hadn’t been preannounced, and nothing for investors.

  • Perhaps that’s a good thing.

Until next time.

Mike is the owner of 7 Circles, and a private investor living in London. He has been managing his own money for 40 years, with some success.

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2 Responses

  1. Al Cam says:

    RE property: one thing I noted was that the 30 days capital gains payment timescale on property disposals (other than your main home) will change to 60 days.

    • Mike Rawson says:

      You are of course correct – I think that’s a bit niche for anyone other than a BTL investor, though (and even there, you should be trading from within a company by now).

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Budget October 2021

by Mike Rawson time to read: 3 min