29 Oct 2021 Autumn Budget Update
On 27 October 2021, the Chancellor, Rishi Sunak set out a Budget that he said would be an investment in a more innovative and highly skilled economy. It was not the packed Budget we had in the Spring but there were still some important changes that will impact on businesses and individuals.
This Budget Update is intended to give you some of the detail behind the measures announced by the Chancellor but if you would like to know how the measures affect your business specifically, or would like to discuss potential tax planning situations, please contact us and we will help guide you through.
National Minimum Wage and National Living Wage
The Chancellor announced that the National Living Wage, payable to workers aged 23 and over, will increase by 6.6% from £8.91 per hour to £9.50 from 1 April 2022. Whilst this is positive news for those on low incomes, it will be a significant additional cost for businesses. A summary of the rate changes for all ages is shown below.
| 23 and over | 21 to 22 | 21 to 22 | Under 18 | Apprentice | |
| April 2021 (current rate) | £8.91 | £8.36 | £6.56 | £4.62 | £4.30 |
| April 2022 | £9.50 | £9.18 | £6.83 | £4.81 | £4.81 |
Business Rates
Business rates will be retained but the system is to be reformed. Revaluations will now occur every three years from 2023 and there will be additional reliefs to encourage investment in greener technologies, such as solar panels, and also for businesses making property improvements, where there will be a 12 month exemption on any additional rates charge arising from the works.
In welcome news for the retail, hospitality and leisure sectors in England, there will be a 50% business rates discount in 2022/23, up to a maximum of £110,000. The planned increase in the multiplier in 2022/23 has also been cancelled.
Annual Investment Allowance
The Annual Investment Allowance, which provides businesses with 100% capital allowances relief on their qualifying capital expenditure of up to £1m, was due to end in December but this has been extended to April 2023 to encourage businesses to continue to invest in capital equipment. This will run alongside the Super-deduction of 130% announced in the Spring Budget which is for companies purchasing brand new qualifying plant and machinery assets.
Capital Gains Tax Reporting
The deadline for UK residents to report and pay capital gains tax on the disposal of any UK residential property was increased in the Budget from 30 days after completion to 60 days, effective for completions on or after 27 October 2021.
This extension also applies to non-UK residents disposing of any property within the UK.
Alcohol Duties
In a further boost to the hospitality sector, the planned rise in duty on spirits, wine, cider, and beer has been cancelled. There will also be a significant simplification of alcohol duties with the number of rates dropping from 15 to 6. Rates will be applied to drinks based on their strength which will see some red wines and high-strength ciders having increased rates, whilst lower alcohol drinks such as fruit ciders, and lower strength beers and wines, will see a drop in their duty rate. Good news for prosecco drinkers, all sparkling wines will now pay the same duty as still wines of equivalent strength.
Finally, the Chancellor announced lower duty on draught beer and cider from containers over 40 litres, with rates being cut by 5%.
Research & Development
With the Chancellor keen to help to create a more innovative Britain, he confirmed an increase in public investment in UK Research & Development of £20 billion per year by 2024/25. It was also announced that eligible costs for R&D tax relief will be expanded to include cloud computing and data costs, to support modern research methods, as well as changes to the rules to ensure that tax relief is targeted towards investment and innovation undertaken in the UK, with the aim of encouraging greater investment at home.
Basis Period Reform
This measure won’t make the headlines, but it will impact a number of unincorporated businesses. It has been confirmed that the planned basis period reform will go ahead, although implementation will now be the tax year 2024/25 rather than 2023/24 as previously announced in July. This brings the reform in line with the delayed implementation of Making Tax Digital for income tax.
The reform will see businesses being subject to tax on profits arising in a given tax year rather than their accounting year. So, no change for businesses with year ends between 31 March and 5 April, but for all other businesses the basis will be changing. Further details on how this will work for affected businesses will be published on 4 November 2021.
Universal Credit
Universal Credit has hit the headlines over the last few months with the removal of the temporary £20 increase in weekly payments introduced to assist during the pandemic. In the Budget, the Chancellor announced that they would be permanently cutting the Universal Credit taper by 8% from 63p to 55p to ensure that working more hours is more beneficial to claimants.
Additional announcements that may be of interest to you include:
- The Recovery Loan Scheme has been extended to 30 June 2022.
- Residential property developers whose profits exceed £25m will face a 4% levy to help create a fund to remove unsafe cladding.
- The planned increase in fuel duty has been cancelled.
- There will be a lower rate of Air Passenger Duty on flights between UK Airports.
- The Tonnage Tax regime will be simplified and made fairer.
If you would like anymore information on how this Budget will impact on your business, please contact us. You can see the full budget here.
The information included in this report is intended for guidance only. It is based upon our understanding of current legislation and announcements and is correct at the time of publication. No liability is accepted by R J Francis & Co for actions taken in reliance upon the information given and it is recommended that appropriate professional advice should be taken specific to your circumstances.
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