Autumn Budget

What does the 2021 Autumn Budget mean for my business?

The eyes and ears of the UK public were keenly focused on one man on 27th October 2021 as Rishi Sunak, Chancellor of the Exchequer, announced his first budget since COVID restrictions were lifted back in July.

In what seems now to be an annual tradition for budget announcements, many of the new measures were leaked to the media during the build-up, with some being revealed hours, or even days, before Mr Sunak rose to his feet at the house of commons.

So, what does the outlook for the next six months look like? Are business rates staying the same? Is corporation tax still due to increase in March? And how have the controversial discussions over the national living wage played out?

Following correspondence from our customers, we have handpicked and answered some of their key burning questions below.

Many of my staff are currently paid the National Living Wage, are rises expected?

A topic which has sparked huge debate in recent months, the Chancellor has announced that the National Living Wage will increase by 6.6%, to £9.50 an hour for workers aged 23 and above. Those aged between 21 and 22 will see their pay packet jump to £9.18 an hour.

The increase is estimated to cost businesses an additional £1,074 per year, per employee.

The changes are expected to come into force in April 2022. The government are estimating that this will impact over 2 million of the UK’s lowest paid workers.

The last budget focussed heavily on supporting businesses through the pandemic. Has any additional support been announced?

There has, in the form of a reduction in business rates for certain sectors, but the measures don’t stretch to everyone.

To support local high streets as they adapt and recover from the pandemic, the government is introducing a new temporary business rates relief in England for eligible retail, hospitality and leisure properties for 2022-23, which they claim is worth almost £1.7 billion.

The government estimates that over 90% of retail, hospitality and leisure businesses will receive at least 50% off their business rates bills in 2022-23.

Please note, as it stands, the reductions aren’t permanent, and as of writing, they will expire in April 2023. This will then be replaced by a new re-evaluation cycle in which business rates will be reviewed every three years.

To find out if your business is eligible, contact your local council via the website.

Businesses are often advised to start using greener technologies and solutions. What are the government doing to aid this?

“Building Back Greener” was a recurring theme throughout the Chancellor’s budget speech, with the government keen to point out that the UK had reduced emissions faster than any other country in the G20.

To reinforce their commitment further, Mr Sunak announced the introduction of a new green investment relief for green technologies. Commencing from 1st April 2023 and running until 31st March 2035, the government will introduce targeted business rate exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible heat networks to support the decarbonisation of non-domestic buildings.

The government hopes the new relief will encourage businesses to adopt greener technologies at their premises, with solar panels being used as the most cost-effective example.

With inflation continuing to rise, I’m worried about the inevitable increase in my tax bills. What is being done to prevent this for businesses?

Referencing businesses directly that are concerned about the rise in inflation, the Chancellor announced that next year’s planned increase in the business rates multiplier will be cancelled. They claim the cancellation would be worth £4.6 billion over the next five years.

Opposition counter that the cuts are still not enough to offset the rise in inflation and businesses should continue to look at ways of reducing costs across various areas.

Alcohol sales make up a large proportion of my revenues. How will the new pubs and alcohol duty impact me?

Mr Sunak announced radical changes for alcohol duty during his speech, in what he calls the biggest changes for 140 years.

The UK’s existing duty rates on alcohol will be cut from 15 to six in a simplified system. Moving forward, higher-strength alcoholic drinks such as red wines, fortified wines and high-strength ciders will attract higher duties. Lower-strength drinks – such as rosé, fruit ciders and liqueurs – will attract a lower tax rate than currently.

If you’re a pub or bar owner, you will be able to benefit from a new “draught relief”, cutting duty on beer and cider sold in pubs by the most since 1923. The government claim this should reduce the cost of a pint by 3p!

Many hospitality, tourism and entertainment businesses were hoping for the current 12.5% VAT rate to continue, but this was omitted and ends in April 2022.

Find Out More

The complexities of what the new budget means for UK businesses runs deep. It’s natural to take some time out and absorb the new announcements before analysing the impacts they will have on your business.

If you have any concerns over the new measures or are simply looking for clarity on your running costs and budgetary apprehensions for next year, feel free to contact us on 0800 130 3514.

For more dedicated business-tailored content, please feel free to visit our Business Advice Hub.

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