Key takeaways from Autumn Budget 2021
Chris Downing, Director

Today’s Budget was a departure from previous Conservative Budgets.  The message had previously been to ‘fix the roof when the sun was shining down’, playing down debt and reducing the deficit.  Perhaps with an eye on the ‘levelling-up’ agenda and the converted Labour voters, when Chancellor, Rishi Sunak spoke today, he had news that the Covid impact was not as bad as first thought.

The message was that he will invest that money to bring growth in the future and try to grow the economy to repair the Covid impact (not forgetting the net debt that existed pre-Covid).

There were large amounts of money directed to public services, such as education, social housing, the health system and transport.  Much of this had already been announced, so we have tried to pick out the information to be relevant to our clients.

However, the devil, as always, is in the detail and we will keep you updated.

We will also be hosting a Budget Update webinar on Friday at 11am.  To register, email us and we’ll send you login details.  We look forward to seeing you there!

Update on the economy

  • Inflation in September was 3.1% and is likely to rise further – to average 4% over next year (could this mean interest rises to come?)
  • UK economy forecast to return to pre-Covid levels by 2022.
  • Annual growth set to rebound by 6.5% this year, followed by 6% in 2022.
  • Unemployment expected to peak at 5.2% next year, lower than 11.9% previously predicted.
  • Borrowing as a percentage of GDP is forecast to fall from 7.9% this year to 3.3% next year and 1.5% thereafter.

 

Tax announcements 

  • Relatively few mainstream announcements, but see below about the future:
  • Reforms to the R&D regime that will only cover UK costs and further investment in Innovate UK (an organisation that assists R&D based businesses).
  • Cuts to UK flight taxes.
  • Impact of the reduction in Universal Credit to be lessened.
  • Business Rates will be discounted by 50% for next year for retail, hospitality and leisure businesses.  Further reforms around the calculation of business rates.
  • Annual Investment Allowance of the first £1m of capital spend will continue to attract 100% tax relief up until March 2023.

 

Don’t forget…already on the way

There hasn’t been a great deal of new news for mainstream tax changes, but remember, we’ve already had three key announcements earlier in the year, which will have further impact:

  • Personal tax bands will be frozen until 2026, with personal allowances held at £12,570 and the higher rate tax bracket at £50,270.
  • Corporation Tax rises – from April 2023, companies making more than £250k profit will pay 25% corporation tax, an increase of 6% from now (profits up to £50k will remain at 19%, with a tapered rise to £250k.
  • Introduction of new Health and Social Care levy– effectively a 1.25% tax on all earnings, including dividends.
  • National living wage increase from £8.91 per hour to £9.50, from 1 April 2022

 

Conspicuous by their absence

  • No changes to Capital Gains Tax, Inheritance Tax and Stamp Duty Land Tax.

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