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The Autumn 2021 Budget – 27 October 2021

Here is a 10 minute summary of the Chancellor, Rishi Sunak’s Autumn 2021 Budget:

Today, the Chancellor, Rishi Sunak, delivered a rather optimistic budget. With a landscape of soaring energy prices anticipated this winter and given the green agenda is on everyone’s mind, this post Covid recovery budget has given business, a few reasons to be optimistic about.

The Economy and borrowing

The challenging rise of inflation, in Sept 3.1% likely to rise to 4% as demand has increased faster than the supply chains can meet. The global demand for energy has increased, which has affected energy prices.

The economy is forecasted to grow, according to the Office for Budget Responsibility (OBR) by 6% in 2022.

New Charter for Budget Responsibility

Which sets out 2 fundamental rules:
First underlying public sector. Net debt, excluding the impact of the Bank of England must as a percentage of GDP be falling. Second in normal times. The state should only borrow to invest in our future growth and prosperity.

Secondly, everyday spending must be paid for by taxation.

Heavy Goods Vehicle (HGV) and Excise duty

The HGV levy will be suspended until August 2023.
Including the freezing of Vehicle Excise duty for heavy goods vehicles.

The Scale Up Visa – To attract and relocate the best global talent is Science and Tech sectors. To make the Visa system for international talent, the most competitive in the world.

Research and Development (R&D) Tax Relief

The announcement to increase spending to £22Bn and extend the target to 2026/7 from 2024/25 is an effort, by the Chancellor, to be more prudent.

The latest figures show. The UK has the second highest spending on R&D tax rate in the OECD yet. It’s not working as well as it should UK. Business investment in R&D is less than half the OECD average.
The two changes are:

  • Expanding the scope now includes Cloud computing and Data costs
  • R&D activity needs to be in the UK, not overseas.

The Scale Up Visa

Today’s budget confirms the eligibility criteria for the new Scale Up Visa making it quicker and easier for the fast-growing businesses to bring in highly skilled individuals. 

To attract and relocate the best global talent is Science and Tech sectors. To make the Visa system for international talent, the most competitive in the world.

Property Developer Tax

It is confirmed that property developers earning more than £25m per annum will pay a new tax called the “Building Safety Levy” at 4%, from 6 April 2022.

Property Developer Tax at 4% on turnover greater than £25m

Tonnage Tax for Shipping Companies

In the old, EU system, ships in the tonnage tax regime, were required to fly the flag of an EU state, but that doesn’t make sense for an independent nation.
To reward companies for adopting the UK Merchant shipping flag.

Annual Investment Allowance

The £1m Annual Investment Allowance has been extended from 31 December 2021 to 31 March 2023.

The Capital Allowance “Super Deduction”

Businesses investing in qualifying plant and machinery from 1 April 2021 to 31 March 2023, which are main rate pool assets, will qualify for a 130% Super Deduction

Investments in special rate pool assets, will qualify for a 50% first time allowance.

Sunak said: “Under the existing rule, a construction firm buying £10m of new equipment could reduce their taxable income in the year they invest by just £2.6m. With the super deduction they can now reduce it by £13m. We’ve never tried this before in our country, the [Office for Budget Responsibility] have said it will boost business investment by 10 per cent, around £20bn more per year.”

Businesses investing in qualifying plant and machinery from 1 April 2021 to 31 March 2023, which are main rate pool assets, will qualify for a 130% Super Deduction

Business Rates 50% Discount- Music Venues, Cinemas, Theatres, Hotels and Restaurants

The new business rates reform means that business premises will be more frequently revalued, every three years and the new revaluation cycle will be delivered from 2023.

A 50% discount on business rates for Retail and Hospitality businesses, up to a maximum of £110,000.

The New Business Rates Improvement Relief

To encourage businesses to adopt green technology such as solar panels and energy efficient property improvements. From 2023 every single business will be able to make property improvements., and for 12 months pay, no extra business rates.

Business Rates – The Multiplier

The business rates multiplier will be cancelled for the 2022/23 tax year.
That’s a tax cut for businesses worth over the next five years, £4.6Bn

Innovative Craft Producers – Small Producers Relief

This will extend the principle of small Brewers relief to include for the first time ever. Small cider makers and those making alcoholic drinks of less than 8.5% ABV.
The system will be modernised to reflect the way that people drink today and have done over the last decade

Alcohol Duty and Draught Relief

The number of main duty rates has been reduced from 15 to just 6.
The higher the alcohol content, the higher the Alcohol duty.

A new lower rate of Duty on draft beer and cider., will particularly benefit Community pubs who do 75% of their trade on draft. The new rate will be cut by 5%.

Challenger banks

Small Challenger banks are improving banking competition, which is good for the sector and good for consumers, so to help them the Annual allowance has been increased to £100m.

If you require any additional information regarding any of the above, please contact us at enquiries@pennyhills.com or call us on 0208 064 0969.

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