Autumn Budget & Spending Review 2021

The Chancellor, Rishi Sunak, announced his Autumn Budget and Spending Review on 27th October 2021, citing he wants to deliver “A Stronger Economy For The British People” with a speech highlighting an emphasis on investment in innovation and economic growth and optimism. 

Rishi stated that Inflation is likely to rise and that he had written to the Governor of the Bank of England to “reaffirm their remit to achieve low and stable inflation.” So no doubt interest rate rises will follow, with some mortgage lenders already resetting their mortgage rates.

There was lots of stats delivered and very little detail in the main speech, but behind all the punchlines, we’ve pulled out the bits from this Budget that we think will be of most value to our clients;

Business Rates

The current business rates reduction for businesses in the retail and leisure sectors, which includes pubs, hotels, restaurants, theatres, shops and gyms, will continue for a further year, capped at £110k.

The business rates system will be reformed with revaluations on rates to be done every 3 years from 2023, a new investment relief to encourage businesses to adpot green technologies like solar panels, and from 2023 businesses will be able to improve their premises without paying extra rates on a revaluation for 12 months. There will also be a cancellation of next year’s planned increase in the multiplier applied to the rateable value.

R&D Relief

New rules have been introduced to expand the current R&D tax relief rules to cover data and cloud computing costs to support modern research methods, refocusing the reliefs on innovation in the UK and protecting against abuse of the relief.

Annual Investment Allowance - Extended

The current annual investment allowance (AIA) is set at £1m per year and was expected to reduce to £200k from January 2022. It has been announced that this will not happen and will instead be extended and remain set at £1m until 31 March 2023. This relates to the purchase of equipment, plant and machinery for businesses, and this will be especially helpful to those businesses not trading as a limited company that are not able to benefit from the new super-deduction previously announced.

Low Earners - Universal Credit & National Living Wage

The current Universal Credit system is getting a reform, which is expected to be live by 1 December 2021 affecting the taper rate currently applied to low earners, meaning more working people will keep more of their earnings. The detail will follow.

The National Living Wage will increase to £9.50 per hour from April 2022 for those aged 23 and over.

Basis Period Reform

For sole traders and partnerships not currently operating a 31 March or 5 April accounting year-end, they will need to plan ahead as a new ‘tax year basis’ will come into effect from the 2024/25 tax year meaning a transitional period will apply for 2023/24 for unincorporated businesses with a different basis period year-end. This may accelerate some tax for some businesses so planning should start now. This is expected to go hand in hand with the new Making Tax Digital (MTD) measures coming into play for taxpayers.

Capital Gains Tax - 60 Day Return

Although it wasn’t featured in Rishi’s speech, it was later announced that the 30 day filing deadline for filing a Capital Gains Tax Return for those disposing of UK residential property would be extended to 60 days, following pressure from the OTS (Office of Tax Simplication) as it was deemed that 30 days was not enough time to collate the information and submit the Return. You can read much more on this here.

Surprisingly…

There was no mention of any increase in Capital Gains Tax rates despite lots of speculation. Let’s see what happens in March 2022.

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FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment, and professional services. Our clients vary in size from self-employed sole traders, small enterprises and medium-sized businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.