Autumn Budget : 27 October 2021 – "Age of Optimism?"

Autumn Budget : 27 October 2021 – "Age of Optimism?"

Autumn Budget : 27 October 2021 – Age of Optimism?

Yesterday the Chancellor of the Exchequer, Rishi Sunak, announced the 2021 Autumn Budget and Spending Review in the House of Commons. The statement set out the Government’s spending plans for each government department for the next three financial years.

The Chancellor unveiled his spending plans saying it will be “an economy fit for a new age of optimism” adding “That it is a stronger economy of the future and this Budget is the Foundation”.

Some of the points covered were:

Economy

Inflation in September was 3.1% and was likely to rise to an average of 4% over the next year, per Office for Budget Responsibility (OBR).  However, the OBR expected the economy to return to pre-Covid levels at the turn of the year. 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 12% previously predicted.

Heavy Goods Vehicle Levy

HGV Levy suspension extended for a further year until 2023 and a freeze to Vehicle Excise Duty for HGV’s.

£400m Levelling up boost for The Midlands

The Chancellor said this Budget delivered for all parts of the UK with almost £400m of the UK Government's Levelling Up Fund to be committed to supporting 21 projects across the Midlands   Some of the funding projects included were:

£203m was pledged for projects in the East Midlands, such as a new science centre at Twycross Zoo, the rejuvenation of Leicester Railway Station and a brand new multi-screen cinema in Gainsborough Town Centre.

Additionally, the West Midlands will receive £196m for projects, involving Stoke-on-Trent being awarded funding to build 250 homes to redevelop its city centre, a 2,500 seater venue and the reinvigoration of a goods yard.  Wolverhampton receiving funding for the development of the City Learning Quarter.

£1.05bn of funding over five years has been confirmed to transform local transport networks within the West Midlands part of the transport revolution. The investment will go towards building a clean, green transport network that connects communities and tackles the current climate challenges.

£10bn will also be injected into the Midlands supporting ‘Project Gigabit’, a scheme which aims to rollout gigabit capable broadband for homes and businesses across the UK.

Together with a further £800m for the British Business Bank's Midlands Engine Investment Fund (MEIF) aimed at boosting the region's economy and supporting the growth of smaller businesses (SMEs) between 2017 and 2022.

Enterprise

The government’s launch of a £1.4bn ‘Global Britain’ investment fund was confirmed to attract overseas money to the UK economy.

The fund will provide grants to encourage internationally mobile companies to invest in the UK’s critical and most innovative industries, including life sciences and automotive.

The fund includes £354m in support for investment in life sciences manufacturing and increasing resilience for future pandemics. More than £800m of investment will also be directed at the production and supply chain of electric vehicles, including in the Northeast and the Midlands.

Migration

A £1.4bn British investment fund will be established and a 'scale-up visa system' introduced to help recruitment from overseas to enable fast growing businesses to bring in highly skilled individuals.

Innovation and Ideas – Research & Development (R&D) reliefs 

Increased R&D investment in the UK to reach target of £22bn by 2026/27 two years later than initially planned to help drive economic growth and create the jobs of the future.

The R&D tax credit system to be "modernised" from April 2023 restricting relief to domestic activity to ensure more money is spent in the UK.  The R&D relief scope widened to include cloud computing and data.

Business reliefs/rates

In the 2022-23 tax year businesses in the retail, hospitality and leisure sectors will see a 50% rate cut for the next year up to maximum of £110,000.

Next year’s planned increase in the multiplier will also be cancelled for a further year, with an announcement that the system is to have revaluations carried out more frequently, every three years beginning in 2023.

From 2023, every business will be able to make property improvements without having to pay extra business rates for 12 months where eligible improvements to an existing property increase the rateable value.  

The reforms also include a new investment relief for firms investing in green technologies such as solar panels and heat pumps.

Temporarily increasing the headline rates of tax relief for theatres, museums, orchestras and galleries across the UK can claim from 27 October 2021 to 31 March 2024, as they invest in new productions and exhibitions.

CGT – Extension to period of time to report gains

Extension to period of time deadline for reporting gains on residential property extended from 30 days to 60 days for sales being completed after budget day.

£1m Annual investment tax allowance extended

The chancellor announced an extension to the £1m annual investment allowance, which allows businesses to claim relief on capital investment, to be extended from December 2021 to March 2023.

National minimum wage

The minimum wages for all ages will rise from April 2022.

The ‘National Living Wage’ for workers aged 23 and over will increase from £8.91 to £9.50 per hour. Minimum wages for other age ranges will increase for: 21 to 22 year olds: from £8.36 to £9.18 per hour, 18 to 20 year olds: from £6.56 to £6.83 per hour, for 16 to 17 year olds: from £4.62 to £4.81 per hour and Apprentices: from £4.30 to £4.81 per hour.

Fuel duty increase was scrapped

A planned fuel duty rise has been cancelled amidst a backdrop of supply issues and fuel prices reaching record highs. The freeze means tax on petrol and diesel will remain at 57.95p per litre until at least 2023.

You can read the Chancellor's full speech here

The devil is always in the detail. There were plenty of issues arising from the recent Budget that may affect you, but don’t worry, our experts have examined the finer details of the Autumn Statement and compiled a Budget Summary

If you’re considering how these changes will affect you and your business, get in touch with us at our offices in Derby and Nottingham, we'd be happy to help.