On Wednesday 27th October 2021, the Chancellor, Rishi Sunak, announced the autumn Budget with the overall theme of delivering “a stronger economy for the British people”. LWA’s Corporate & Personal Tax team have summarised the key points from the announcement below.
Economy overview
The Office for Budget Responsibility (OBR) forecasts that the economy will grow by 6.5% this year and inflation will average 4% next year.
Business rates
Whilst business rates in general will be retained (the planned increase in the business rates multiplier will be cancelled), there will be some reforms, such as a new 12-month relief for companies to invest in their premises and a new 50% business rates discount will apply in the retail, hospitality, and leisure sectors, up to a maximum of £110,000.
Employment news
For employees aged 23 and over, the national living wage will increase from £8.91 to £9.50 per hour from April 2022, with the following increases in the national minimum wage for younger workers:
- for those aged 21-22: From £8.36 to £9.18
- for 18 to 20-year-olds: From £6.56 to £6.83
- for under-18s: From £4.62 to £4.81
There will be an increase of 42% (£3.8bn) in government spending on skills and training.
The above follows an announcement by the government in September, that employees, employers and the self-employed would all pay £1.25p more in the pound for National Insurance (NI) from April 2022, to fund social care.
Research and Development
The government will invest £20bn in R&D by 2024-25 with the Chancellor stating this is a “record investment to secure the UK’s future as a global science superpower”. Whilst the tax relief for business R&D spending will be expanded to include the data collection and cloud company sectors, the relief across all sectors will be limited to domestic activities.
Fuel
The planned rise in fuel duty will be cancelled following the highest pump prices the country has seen in eight years.
Funding
£1.7bn will be invested in local areas across the UK as part of the Levelling Up Fund.
Schools will get an extra £4.7bn by 2024-25 including just under £2bn of new funding to help with recovery from the pandemic, as funding set to increase by more than £1,500 per pupil.
Property and infrastructure
A 4% levy will be placed on property developers with profits over £25m (to help create a £5bn fund to remove unsafe cladding).
There will be an investment of £21bn on roads and £46bn on railways to improve journey times between cities.
Tax
The Chancellor confirmed that the £1m annual investment allowance that was due to end in December this year, will be extended to March 2023. He also confirmed that the corporation tax increase announced earlier this year from 19% to 25% will continue to be implemented from April 2023.
If you need advice as a result of the Chancellor’s Autumn Budget, please contact a member of our team – we’re here to help. Call 0161 905 1801 in Manchester or 01925 830 830 in Warrington. We will also be running a webinar hosted by Steve Collings in December ‘Planning for a successful 2022’ where you’ll have the opportunity to ask questions about announcements made in the Budget – please email mail@lwaltd.com to register your place.
