Late last month, businesses and individuals across the UK listened to Chancellor Rishi Sunak’s Autumn Budget 2021 speech.
To much surprise, Sunak diverged from many analysts’ expectations (and our own predictions) that he would raise taxes to tackle inflation and cut the Government’s spending deficit.
The tax changes in the speech were few and far between, with some headlines including reductions in alcohol duty, a softening of the universal credit cut and tax cuts for shipping companies that fly the Red Ensign.
What else did the Chancellor announce? Here are our key Autumn Budget 2021 takeaways.
Business rates reform in England
A key announcement from the Chancellor was a range of reforms to business rates in England.
First, the business rates multiplier will be frozen for 2022/23, which should save businesses in England £4.6 billion over the next five years, according to the Treasury.
Business rates revaluations will also take place more frequently – every three years, rather than every five. That way, the rates businesses pay should be fairer and more accurate.
Sunak also announced business rates would be cut by 50% for eligible retail, hospitality and leisure businesses in 2022/23, up to a cap of £110,000 per premises.
This will be positive news for eligible businesses that had faced going from a 66% rates discount to none at all on 1 April 2022, which is when the 50% discount will now kick in.
Recovery loan scheme extension
Just because it looks like we’re out of the worst with the COVID-19 pandemic, it doesn’t mean businesses have to keep going without Government support schemes.
Originally due to end on 31 December 2021, the recovery loan scheme will now come to a close on 30 June 2022, although what businesses can claim will change at the turn of the calendar year.
Until the end of 2021, businesses can borrow between £25,001 and £10 million but at the end of 2021, only SMEs will be able to borrow a maximum of £2m.
Your business will still be required to repay the loan, but as the Government partially refunds lenders for defaulted loans, recovery loans are much easier to get a hold of than typical loans.
National living wage rises to £9.50 an hour
Some good news for individuals who earn the national living wage: the minimum rate of hourly pay for over-23s will increase from £8.91 to £9.50 from 1 April 2022.
Despite its name, however, the national living wage does not always match the average cost of living in the UK, although it now does match estimates from the Living Wage Foundation.
Those living in London might continue to feel the pinch, however, where the average wage required for the minimum standard of living there is £10.85 an hour.
Employers will have to take the new living wage into consideration when they work out the overheads, however.
As Jane Gratton, head of people policy at the British Chambers of Commerce, said:
“There is a limit to how much more firms can continue to absorb rising costs before they have to raise their own prices adding to inflationary pressures.”
Reach out to us to discuss your business finances and tax strategy.