On Wednesday 27th October, the Chancellor of the Exchequer, Rishi Sunak, addressed the House of Commons to announce the government spending review and 2021 Autumn Budget. Following on from PMQs, Mr Sunak took to the floor to deliver a passionate speech explaining how the government will recover from the setbacks of the pandemic, as well as the more recent supply chain issues.
The Chancellor had to take his fair share of criticism from the speakers of the House, due to releasing information beforehand through the media on what was to be announced before the Autumn Budget took place. Through rises, cuts, reliefs, and investments, we break down the key announcements set out by the Chancellor and the potential impact on people and the economy.
The Main Talking Points
- A 50% business discount rate for retail, hospitality, and leisure businesses which will last for a year. The rate, capped at a maximum of £110,000, is said to be the largest single rate tax cut for businesses in 30 years and is worth approximately £1.7billion.
- Decreasing the Universal Credit taper from 63p to 55p will allegedly help two million families save an average of around £1,000 a year. It enables those on benefits who are in work to keep more of what they earn. The 8% drop is more than previously expected and was the Chancellor’s ‘rabbit in the hat’ announcement of the Autumn Budget.
- A National Living Wage rise was come to be expected after appearing in most media outlets over the past few days. The increase of 6.6% to £9.50 an hour will come into effect next year and will mean a full-time worker’s salary will increase by over £1,000.
- Alcohol Duty Tax is slashed with the number of main duty rates down from 15 to just 6. It will be measured by the strength of the alcohol as stronger drinks will be subject to higher rates.
- Business rates improvement relief will allow all businesses to make property improvements as of 2023. For 12 months, they will pay no extra business rates, whilst encouraging businesses to go green through new investment relief.
- The Annual Investment Allowance is extended as the previous December deadline is scrapped. The £1 million investment will be extended to March 2023 as tax breaks on investment are removed.
- Research and Development (R&D) relief will expand to cover cloud computing and data. The Chancellor also stated that the government’s spending on R&D has reached 20%.
- Passenger Duty for domestic travel within the UK is lowered as the UK aviation sector gets a boost. As well as this, long haul flights will be subject to increased passenger duty depending on the length of the journey.
- An £850m investment to protect museums, galleries, libraries, and local culture as well as extension of tax reliefs for museums and galleries to a further two years.
Our Tax Manager, Adam Truluck, had this to say regarding the Chancellor’s Autumn Budget, “Several large changes have been made across the board in this Autumn budget, with the most welcome change being the rise in National Living wage in my opinion. This will help millions of low-paid workers receive a better wage and therefore a better standard of living, which is much needed after the last 18 months. The cut in the taper for universal credit will also see this increased further.
Another big change is the 50% business rate relief for the hospitality, entertainment and leisure sector, as well as the business rates improvement relief. This will go a long way in helping these businesses that have severely suffered throughout the pandemic. It is also good to see that some changes we were expecting to see come in, actually did not. For example the increase in Capital Gains Tax to fall in line with Income Tax did not materialise, which is great news for anyone looking to sell investment properties in the future. ”
We hope this has outlined to you the key announcements set out by the Chancellor in the 2021 Autumn Budget. If you require any further information on any government schemes and announcements, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.
